Does Management Get Paid Overtime? (w/Examples) + FAQs

No, most managers do not get paid overtime. The Fair Labor Standards Act creates specific exemptions for executive, administrative, and professional employees that allow employers to avoid paying time-and-a-half for hours worked beyond 40 per week. However, job titles alone do not determine exempt status—your actual daily duties and salary level decide whether you qualify for overtime pay.

Under federal overtime regulations, employees must meet a salary threshold of at least $684 per week ($35,568 annually) and pass a duties test to be considered exempt. In fiscal year 2024, the Department of Labor recovered over $127 million specifically for overtime violations affecting more than 101,000 workers—making misclassification one of the most costly employer mistakes.

Here’s what you’ll learn in this article:

📋 The three tests every manager must pass to be legally exempt from overtime under federal and state law

💰 Exact salary thresholds for 2026, including the six states that require higher salaries than federal law

⚖️ Real lawsuit examples where managers won millions because their employers misclassified them

🚨 Common mistakes that cause managers to lose their exempt status (and become owed years of back pay)

📝 Step-by-step guidance on how to file a complaint if you believe you’re owed overtime

Understanding the Federal Overtime Framework

The Fair Labor Standards Act establishes that all employees are entitled to overtime pay unless they fall within a specific exemption. The law places the burden on employers to prove an exemption applies. This framework means paying someone a salary does not automatically make them exempt from overtime.

The FLSA requires employers to pay non-exempt employees one and one-half times their regular rate for all hours worked over 40 in a workweek. Many employers mistakenly believe that giving someone a manager title or salary automatically exempts them. This misconception has led to billions of dollars in wage claims against major retailers, restaurants, and corporations.

The Three-Part Test for Exempt Status

To classify any employee as exempt from overtime, employers must prove the worker satisfies all three requirements established by Department of Labor regulations:

If an employee fails any of these tests, they must be paid overtime regardless of their title, pay structure, or employer’s classification.

The Executive Exemption: When Managers Are Truly Exempt

The executive exemption applies to employees who function as genuine managers. Meeting this exemption requires satisfying all four criteria specified in federal regulations. A job title of “manager” or “supervisor” means nothing if the actual work performed does not match these requirements.

The Four Required Elements

1. Primary Duty Must Be Management

The employee’s primary duty must consist of managing the enterprise or a recognized department. The DOL regulations define management duties to include:

• Interviewing, selecting, and training employees
• Setting and adjusting pay rates and work hours
• Directing employee work
• Maintaining production or sales records
• Appraising employee productivity
• Handling complaints and grievances
• Disciplining employees
• Planning work schedules
• Determining techniques to be used
• Controlling the flow of merchandise

2. Must Supervise Two or More Full-Time Employees

The executive must customarily and regularly direct the work of at least two full-time employees or their equivalent. This means supervising employees whose combined hours equal at least 80 hours per week. Four part-time employees working 20 hours each would satisfy this requirement.

The supervision requirement has important limitations. According to DOL guidance on supervision equivalency, a department with five full-time non-exempt workers can have at most two exempt supervisors. An employee’s work can only count toward one supervisor’s total.

3. Must Have Hiring and Firing Authority

The executive must have the authority to hire or fire other employees, or their recommendations must be given particular weight in these decisions. This does not require final decision-making authority. However, the employee’s suggestions regarding hiring, firing, advancement, promotion, or status changes must carry significant influence.

4. Must Meet the Salary Requirements

The employee must earn at least $684 per week on a salary basis, meaning their pay cannot fluctuate based on hours worked or work quality.

What About “Working Managers”?

Many managers perform a mix of managerial and non-managerial tasks. The DOL regulations explicitly address this situation. “Working supervisors” whose primary duty is the regular work of their department—not management—are not exempt.

For example, a restaurant manager who spends most of their time cooking, cleaning, and serving customers is not performing management as their primary duty. This manager would likely qualify for overtime despite their title.

The Primary Duty Analysis

Determining “primary duty” involves evaluating multiple factors:

Employees who spend more than 50 percent of their time on management duties will generally satisfy the primary duty requirement. However, time alone is not the sole test. Courts have found managers exempt even when they spent the majority of their time on non-exempt tasks, if their management duties were crucial to business success.

The Administrative Exemption: Beyond Traditional Management

Some managers may qualify as exempt under the administrative exemption instead of the executive exemption. This exemption covers employees who support management operations and have significant decision-making authority outside of supervising other employees.

Administrative Exemption Requirements

To qualify, an employee must:

1. Have a primary duty of office or non-manual work directly related to management or general business operations
2. Exercise discretion and independent judgment on matters of significance
3. Meet the same salary requirements as executive employees

Examples of administrative employees include human resources managers, financial analysts, marketing specialists, and quality control managers. The key distinction is that administrative employees support the business operations rather than supervising production workers.

2024 DOL Overtime Rule: What Happened and Current Status

In April 2024, the Department of Labor issued a final rule that would have dramatically increased overtime salary thresholds. The rule increased the threshold to $844 per week ($43,888 annually) on July 1, 2024, with a planned increase to $1,128 per week ($58,656 annually) on January 1, 2025.

The Texas Court Decision

On November 15, 2024, a federal court in Texas vacated the entire 2024 overtime rule. The court ruled that the DOL exceeded its authority under the FLSA by setting salary thresholds so high that they effectively eliminated the duties test.

As a result of this decision:

The court found that the 2024 rule “effectively eliminated consideration of whether an employee performs bona fide executive, administrative, or professional capacity duties” and focused the exempt status inquiry only on salary.

What This Means for 2026

For 2026, the federal salary threshold remains $684 per week ($35,568 annually) for the executive, administrative, and professional exemptions. The highly compensated employee exemption threshold remains $107,432 annually.

However, employers must still ensure employees meet all three tests—salary level, salary basis, and duties. The vacated rule reinforced that job duties remain the primary consideration for exemption status.

State Overtime Laws: Higher Standards You Must Know

Six states have set their salary thresholds higher than federal law. Employers must follow whichever law is more favorable to employees. This means managers in these states must earn more than the federal minimum to be exempt.

2026 State Salary Thresholds for Exempt Employees

A manager earning $50,000 annually would be exempt under federal law but would qualify for overtime in California, Washington, and New York City because their salary falls below those state thresholds.

California’s Unique Overtime Rules

California law differs from federal law in several critical ways:

Daily Overtime: California requires overtime for hours worked beyond 8 hours in a single day, not just 40 hours per week. A manager working 10 hours on Monday and 10 hours on Tuesday earns 4 hours of daily overtime, even if they take Friday off.

Double Time: California mandates double the regular rate for hours worked beyond 12 in a day. Work on the seventh consecutive day also triggers special overtime rules.

Stricter Duties Test: California requires exempt employees to spend more than 50 percent of their time on exempt duties. Federal law allows more flexibility in determining primary duty.

Scenario-Based Examples: Is This Manager Exempt?

Understanding exemption status requires examining real-world situations. The following scenarios illustrate how the exemption tests apply to common management positions.

Scenario 1: The Retail Store Manager

Maria works as a store manager for a clothing retailer. She earns $52,000 annually and has the title “Store Manager.” Her duties include:

• Opening and closing the store
• Handling customer complaints
• Processing merchandise shipments
• Working the cash register during busy periods
• Scheduling employees
• Conducting performance reviews
• Hiring part-time workers

Result: Maria is likely EXEMPT because she meets all four requirements of the executive exemption.

Scenario 2: The Assistant Manager Trap

Carlos works as an assistant manager at the same store. He earns $38,000 annually. His duties include:

• Working alongside hourly employees on the sales floor
• Covering shifts when employees call out sick
• Restocking merchandise and organizing displays
• Helping customers and processing transactions
• Following the store manager’s instructions on scheduling

Result: Carlos is likely NON-EXEMPT and entitled to overtime because he fails multiple duties tests. His assistant manager title does not make him exempt.

Scenario 3: The Restaurant Manager Dilemma

David manages a busy restaurant. He earns $55,000 annually. Court cases involving restaurant managers have produced mixed results:

During slow periods, David:

• Schedules employees, reviews applications, and trains new staff
• Handles inventory orders and vendor relationships
• Resolves customer complaints and reviews sales reports

During busy periods, David:

• Cooks on the line when kitchen staff fall behind
• Buses tables and assists servers
• Works the register and hosts customers

The DOL provides specific guidance for determining restaurant manager exemption status. Even if David performs substantial non-exempt work, he may be exempt if his management duties are the most important duties he performs—not just the majority of his time.

Major Misclassification Lawsuits: The Real-World Consequences

Manager misclassification has cost major corporations hundreds of millions of dollars. These cases demonstrate that job titles mean nothing—actual job duties determine exemption status.

Staples: $38 Million Settlement

Office supply retailer Staples agreed to pay $38 million to settle claims that it misclassified assistant managers. The lawsuit alleged that assistant managers spent most of their time performing the same tasks as hourly workers—stocking shelves, operating cash registers, and helping customers. Despite their manager titles, these employees deserved overtime pay.

Burlington Coat Factory: $20 Million Settlement

Burlington agreed to pay nearly $20 million to assistant store managers who claimed they were misclassified. The assistant managers performed non-managerial tasks such as:

• Stocking shelves
• Scanning prices
• Unloading trucks
• Assisting customers

More than 1,600 assistant managers shared in the settlement, receiving an average payout of $12,000 each.

Rite-Aid: $20.9 Million Settlement

Rite-Aid paid $20.9 million to assistant managers and co-managers across 31 states. The lawsuit alleged these employees lacked real managerial or supervisory authority. This case reinforced that titles alone do not determine overtime eligibility—actual job duties do.

TJ Maxx Companies: $4.75 Million Settlement

TJX Companies, parent of TJ Maxx, Marshalls, and HomeGoods, agreed to pay $4.75 million to settle claims that assistant store managers were not paid overtime during their training periods. The plaintiffs argued that during training, they spent most of their time working alongside hourly employees rather than performing management duties.

Common Mistakes That Cause Managers to Lose Exempt Status

Mistake 1: Improper Salary Deductions

Employers who make improper deductions from exempt employees’ salaries can destroy the salary basis requirement. Under the FLSA, exempt employees must receive their full salary for any week in which they perform any work.

Prohibited Deductions Include:

Permitted Deductions Include:

• Full-day absences for personal reasons
• Full-day absences for sickness (if covered by a benefit plan)
• Unpaid disciplinary suspensions for workplace conduct rule violations
• First and last week of employment (prorated)

When an employer makes improper deductions, the exempt status can be lost not just for that employee but potentially for all employees in the same job classification.

Mistake 2: Failing the Two-Employee Supervision Test

An executive must supervise at least two full-time employees or their equivalent—80 hours of subordinate work per week. Common mistakes include:

• Counting employees supervised by other managers
• Counting part-time employees without calculating total hours
• Having too many “exempt” supervisors for the available subordinates

Mistake 3: Relying on Job Titles Instead of Duties

The Department of Labor makes clear that job titles do not determine exempt status. Calling someone an “Assistant Manager” or “Shift Supervisor” means nothing if their actual duties do not qualify for exemption.

Mistake 4: Treating All Managers the Same

Even within a single company, a store manager at one location may be exempt while a store manager at another location is non-exempt. Factors like store size, staffing levels, and individual job duties can create different outcomes.

Mistakes to Avoid

Understanding what not to do helps both employers and employees navigate overtime rules. These common errors lead to costly consequences.

Do’s and Don’ts for Employers

Do’s

✓ Conduct a detailed job duties analysis for every position classified as exempt. The analysis should focus on what employees actually do, not what job descriptions say.

✓ Review exemption status annually, especially when job duties change or salary thresholds increase at the state level.

✓ Maintain accurate time records even for exempt employees. These records can help defend against future claims and track FMLA leave.

✓ Create a safe harbor policy that prohibits improper deductions and establishes a complaint procedure. This can help maintain exempt status if inadvertent deductions occur.

✓ Check state law requirements because states like California, New York, and Washington have higher salary thresholds and stricter duties tests than federal law.

Don’ts

✗ Don’t assume paying a salary makes someone exempt. The duties test matters more than the salary test in most cases.

✗ Don’t rely on employee consent to waive overtime. Employees cannot legally waive their right to overtime pay.

✗ Don’t dock exempt employees for partial-day absences. This destroys the salary basis and converts the employee to non-exempt status.

✗ Don’t classify multiple supervisors as exempt when there aren’t enough subordinates to go around. Each supervisor must individually meet the two-employee test.

✗ Don’t assume refusing to pay unauthorized overtime is lawful. All hours worked must be paid, though employees can be disciplined for policy violations.

How to File an Overtime Claim

If you believe you have been wrongly denied overtime pay, you have options for recovering what you’re owed.

Step 1: Gather Documentation

Before filing any complaint, collect:

• Pay stubs showing your salary and hours worked
• Work schedules and time records
• Job descriptions and employment agreements
• Emails or communications about your duties
• Names of managers and supervisors

Step 2: Choose Where to File

You can file a complaint with:

U.S. Department of Labor Wage and Hour Division

• Call: 1-866-487-9243
• File online at www.dol.gov
• Contact your nearest WHD field office

State Labor Department
Many states have their own wage and hour enforcement agencies. Filing with both federal and state agencies may maximize your recovery.

Private Lawsuit
An employment attorney can file a lawsuit to recover:

• Back pay for unpaid overtime
• Liquidated damages (often equal to back pay, effectively doubling recovery)
• Attorney’s fees and costs

Step 3: Understand the Time Limits

The statute of limitations for FLSA claims is generally two years. For willful violations—where the employer knew they were breaking the law—the limit extends to three years. Acting quickly protects your ability to recover the maximum amount.

Potential Recovery

When employers violate overtime laws, they may be liable for:

Pros and Cons of Exempt Status

Pros of Being Exempt

✓ Schedule Flexibility: Exempt employees often have more autonomy over their work hours. If you finish early, you can leave early without losing pay.

✓ Stable Income: Your paycheck stays the same regardless of hours worked. You know exactly what you’ll earn each pay period.

✓ Career Advancement: Exempt positions are typically considered higher-level roles with more responsibility and potential for promotion.

✓ No Time Clock: Many exempt employees appreciate not having to punch in and out or track every minute of their workday.

✓ Professional Status: Being exempt often carries greater professional prestige and may include additional benefits like bonuses.

Cons of Being Exempt

✗ No Overtime Pay: Working 50, 60, or more hours per week means earning the same as working 40 hours. Your effective hourly rate decreases as hours increase.

✗ Work Expectations: Employers often expect exempt employees to work until the job is done, regardless of time.

✗ Potential Misclassification: Some employers incorrectly classify workers as exempt to avoid paying overtime. If this happens to you, you lose money.

✗ Limited Breaks: While exempt employees aren’t subject to federal break requirements, this can mean less protected downtime.

✗ Harder to Document Claims: Without time records, proving overtime violations becomes more difficult if issues arise later.

Special Situations and Edge Cases

Highly Compensated Employees

Employees earning at least $107,432 annually can qualify for exemption under a simplified duties test. The highly compensated employee exemption requires:

• Total annual compensation of at least $107,432
• At least $684 per week paid on a salary basis
• Primary duty of office or non-manual work
• Customarily and regularly performs at least one exempt duty

This creates an easier path to exemption for high earners who might not fully satisfy the standard executive, administrative, or professional duties tests.

Computer Professionals

Computer professionals may be paid hourly and still qualify as exempt. The minimum hourly rate is $27.63 under federal law. In California, computer professionals must earn at least $58.85 per hour in 2026 to qualify for exemption.

Outside Sales Employees

Outside sales employees have no salary requirement for exemption. If your primary duty is making sales away from the employer’s place of business, you may be exempt regardless of salary level.

Teachers and Academic Personnel

Teachers at educational institutions have no minimum salary requirement for exemption. The exemption applies if the primary duty is teaching, tutoring, instructing, or lecturing.

Recent Court Decisions on Manager Overtime

Dollar General Store Managers

Dollar General has faced extensive litigation over whether store managers qualify as exempt. Courts have generally found store managers exempt when they:

• Are the senior-most person in the store
• Have hiring, scheduling, and disciplinary authority
• Control store operations and profitability

However, courts have also recognized that performing substantial non-exempt work does not automatically disqualify someone from exemption if their management duties are the most important duties they perform.

Starbucks Manager Classification

Starbucks has faced multiple lawsuits alleging misclassification of store managers. A Canadian class action alleged that Starbucks store managers were “uniformly misclassified” because their company policy required them to regularly perform the same duties as non-exempt employees on a non-exceptional basis.

The Starbucks scheduling principles allegedly required store managers to work coverage hours during peak times, effectively making them “working managers” who should not qualify for exemption.

The Helix Energy Supreme Court Case

In 2023, the Supreme Court ruled in Helix Energy Solutions Group v. Hewitt that a high-earning oil rig worker was not paid on a salary basis despite earning over $200,000 annually. The worker was paid a daily rate with no guaranteed weekly minimum. This case reinforced that how pay is structured—not just the total amount—determines salary basis status.

FAQs

Are all salaried employees exempt from overtime?

No. Salary alone does not determine exempt status. Employees must also meet the minimum salary threshold and pass the duties test for a specific exemption category to be considered exempt from overtime.

Can I waive my right to overtime pay?

No. Employees cannot legally waive their right to overtime compensation. Even if you voluntarily agree to work extra hours without overtime pay, your employer must still pay you properly.

Does my employer have to pay unauthorized overtime?

Yes. Employers must pay for all hours “suffered or permitted” to be worked, regardless of whether overtime was authorized in advance. However, employers may discipline employees for working unauthorized overtime.

Can my employer give me comp time instead of overtime pay?

No for private sector employers. Private employers cannot substitute compensatory time off for overtime pay without violating the FLSA. Only government employers may offer comp time to non-exempt employees.

How far back can I claim unpaid overtime?

Two to three years. The statute of limitations is two years for non-willful violations and three years for willful violations, where the employer knew they were breaking the law.

Does my job title determine my exemption status?

No. Job titles are irrelevant for determining exempt status. The DOL explicitly states that job titles do not determine exemption—only actual job duties and salary matter.

Can I be exempt in one state but not another?

Yes. Because states have different salary thresholds, an employee earning $50,000 annually would be exempt under federal law but non-exempt in California, Washington, or New York City where state thresholds are higher.

Does my employer have to track my hours if I’m exempt?

No under federal law. The FLSA does not require employers to track hours for exempt employees. However, some states require it, and many employers choose to track hours for FMLA compliance and workforce management.

Can I lose my exempt status if my employer docks my pay?

Yes. Improper salary deductions can destroy the salary basis requirement and convert an exempt employee to non-exempt status, entitling them to overtime for the affected period.

What happens if my employer misclassified me?

You can recover back pay. If misclassified as exempt, you may be entitled to back overtime pay for two to three years, plus liquidated damages that can double your recovery.