The most expensive misunderstanding in wage-and-hour law fits in one sentence: ’we pay them a salary, so they’re exempt.’ Salary is only one leg of exemption — the position must also meet a duties test — and every misclassified employee accumulates unpaid overtime liability week after week until someone checks.
This one-page guide puts the classifications side by side: non-exempt employees entitled to minimum wage and time-and-a-half overtime past 40 hours, with detailed hour records required; exempt employees who must meet both the salary threshold and duties criteria, with no overtime eligibility regardless of hours. The common-errors column addresses the myths — that job titles decide, that all salaried staff are exempt, that hour tracking is optional.
Who should use this guide
- Small business owners who classified by job title and salary alone
- Payroll administrators inheriting classifications no one documented
- Managers deciding how to structure a new position’s pay
- Employers preparing for a classification self-audit
What it helps prevent
- Overtime back-pay liability accumulating on misclassified salaried staff
- Missing time records for employees who were non-exempt all along
- Classification by job title instead of salary basis and actual duties
- Exempt salaries that slipped below the required threshold
- DOL audit findings multiplied across every similarly classified employee
What’s inside
- Side-by-side comparison — pay structure, overtime, minimum wage protections
- Salary threshold requirement for exempt status
- Duties-test principle — classification beyond titles and pay frequency
- Recordkeeping differences — daily hour records for non-exempt staff
- Common classification errors and the myths behind them
Before you process payroll, terminate, classify, deduct, or respond to a claim, get the decision reviewed.
Faulkner HR Solutions helps Texas employers, nonprofits, municipalities, and growing businesses fix the people systems behind recurring workplace problems. If this resource raised a risk flag, do not guess your way through the next step.