Classify a role as overtime-exempt only when all three prongs pass

Handed a salaried employee and asked whether they owe overtime, the base model reaches for a single shortcut: salaried means exempt. That instinct is wrong on both ends. It calls a salaried assembly worker exempt (their duties are manual), and it calls a well-paid hourly manager exempt (they are not paid on a salary basis at all). And when a role is non-exempt, the base model rarely names why — which is the actionable part.

Exemption from overtime under the FLSA white-collar rules is a three-part test, and a role is exempt only when all three parts pass. Fail any one and the role is non-exempt (overtime-eligible).

Contract

You are given one role: its pay structure (salary or hourly), the amount (weekly or annual), and what the person primarily does. Decide whether the role is exempt from overtime. Answer YES only when all three prongs below are satisfied; otherwise answer NO and name the single prong that fails — salary_basis, salary_level, or duties. When the answer is YES, the failed prong is none.

The three prongs (all required for exempt)

1. Salary basis — the person is paid a fixed, predetermined salary that does not vary with hours worked. Paid by the hour → this prong fails, and hourly pay is non-exempt no matter how high the hourly rate is.
2. Salary level — that salary is at or above the standard threshold of $684 per week ($35,568 per year). Below it → this prong fails, even for a genuine manager. (29 CFR Part 541, US Dept. of Labor; standard salary level effective 2020-01-01. The threshold is inclusive: exactly $684/week passes.)
3. Duties — the person's primary duties are genuinely executive, administrative, or professional. Any one of these qualifies:

• Executive — manages the enterprise or a department, customarily directs the work of two or more full-time employees, and has real authority (or influential input) over hiring and firing.
• Administrative — office/non-manual work directly related to management or general business operations, exercising discretion and independent judgment on matters of significance.
• Professional — work requiring advanced knowledge in a field of science or learning, typically from prolonged specialized instruction (attorney, engineer, pharmacist, architect, and the like).
• Routine, repetitive, manual, or purely clerical work that follows fixed instructions with no independent judgment does not qualify — this prong fails even at a high salary.

> Why $684 is still the number (as of 2026-07): $684/week is the 2019 rule's standard salary level. The Department of Labor's 2024 rule raised it to $844 (July 2024) and then $1,128 (January 2025), but that rule was vacated nationwide by the U.S. District Court for the Eastern District of Texas in November 2024, restoring the 2019 level as the operative federal threshold. The vacatur is under appeal — re-verify before relying on the figure, and note that some states set higher thresholds of their own.

Reporting order when more than one prong fails

A role can fail more than one prong at once (an underpaid hourly clerk fails all three). Report the failing prong in this fixed order of precedence and name the first one that fails:

1. salary_basis (is it even a salary?), then
2. salary_level (is the salary high enough?), then
3. duties (do the duties qualify?).

Rationale: if there is no salary at all, the salary level is undefined, so salary_basis is the primary defect; duties only become the deciding factor once the pay prongs are both satisfied.

Worked examples (base default → correct)

Executive, clearly exempt. A marketing director earns a flat $1,500-a-week salary, runs a team of five, and hires and fires. All three prongs pass (salary basis ✓, above $684 ✓, executive duties ✓).

• Base default: exempt (correct here, for the wrong reason — "she's salaried").
• Correct: {"exempt": "YES", "failed_prong": "none"}

Salaried but below the threshold. A restaurant assistant manager takes home a flat $620 weekly salary and genuinely manages the floor and the crew. Salary basis ✓, but $620 sits below $684 → salary level fails. Real duties don't rescue an under-threshold salary.

• Base default: exempt ("salaried manager").
• Correct: {"exempt": "NO", "failed_prong": "salary_level"}

Highly paid, but hourly. A bartender-turned-shift-lead earns $30 an hour and supervises the bar staff. Because pay is hourly, the salary-basis prong fails before amount or duties even matter.

• Base default: exempt ("makes good money, runs the bar").
• Correct: {"exempt": "NO", "failed_prong": "salary_basis"}

Salaried, above threshold, but manual duties. A warehouse picker draws a flat $1,100 weekly salary and spends the shift pulling and packing orders by hand, supervising no one. Salary basis ✓ and salary level ✓, but the duties are routine manual work → duties fails.

• Base default: exempt ("salaried, and paid well").
• Correct: {"exempt": "NO", "failed_prong": "duties"}

Fails everything — report the first. A dishwasher earns $11 an hour and washes dishes. Hourly (basis fails), under threshold (level fails), manual (duties fails). By the precedence order, report the first.

• Correct: {"exempt": "NO", "failed_prong": "salary_basis"}

Edge cases

• Exactly at the threshold. A salary of exactly $684/week (or $35,568/year) meets the salary-level prong — it is "at or above," inclusive. $683/week does not.
• High hourly rate. A $60/hour specialist is still non-exempt on the basis prong. High pay never converts hourly into exempt; only a true salary can satisfy the basis prong.
• Only one direct report. The executive duty requires directing two or more employees. A salaried lead who oversees a single person does not meet the executive duty on that basis alone.
• Manager paid below threshold. Genuine management duties do not cure a sub-$684 salary — it is still non-exempt on salary_level.
• Salaried but scripted/routine. A salaried worker who only applies fixed rules with no discretion fails the duties prong even at a comfortable salary.
• Owner/officer, professionals without a license nuance, and highly-compensated shortcuts exist in the full regulation; when a role clearly fails one of the three basic prongs, that failure decides it regardless.

Do / Don't

• Do check all three prongs before answering YES — salaried is a necessary condition, not a sufficient one.
• Don't treat any hourly worker as exempt, no matter how high the rate.
• Do compare the weekly-equivalent salary against $684/week (annual ÷ 52) before trusting the duties.
• Don't let impressive duties override a below-threshold salary or an hourly pay structure.
• Do name the first failing prong in the precedence order basis → level → duties.
• Don't answer none for a non-exempt role, or name a prong for an exempt one.

Common mistakes (the base's wrong defaults)

• "Salaried ⇒ exempt." The single biggest error. Salaried roles below $684/week, and salaried roles doing manual/clerical work, are non-exempt.
• "Well paid ⇒ exempt." A high hourly rate is still hourly; the basis prong fails.
• Ignoring duties entirely. A salaried, above-threshold line worker or data-entry clerk is non-exempt on duties.
• Right verdict, wrong reason. Even when NO is correct, the base often can't name which prong failed — the reporting order above makes it deterministic.
• Off-by-one on the threshold. $684/week is in; $683/week is out. The boundary is inclusive.

Quick checklist

1. Paid a fixed salary? No → NO / salary_basis.
2. Salary ≥ $684/week ($35,568/year)? No → NO / salary_level.
3. Primary duties executive, administrative, or professional? No → NO / duties.
4. All three yes → YES / none.