The federal Fair Labor Standards Act (FLSA) requires that employers pay non-exempt employees overtime for all hours worked in excess of 40 hours in a workweek. Some states require overtime in additional circumstances. However, there are federal and state exemptions from these requirements for employees who meet certain salary and duties tests. Here are some key things to know for both federal exemptions and state exemptions from overtime for 2025.
Federal exemptions from overtime
The FLSA allows for exemptions from the federal overtime (and minimum wage) requirements for certain employees who work in administrative, professional and executive jobs (known as "exempt" employees). To be considered "exempt," these employees must generally satisfy three tests.
Currently, to fall within the executive, administrative and professional (EAP) employee exemptions, an employee generally must:
- Be paid a salary, meaning they are paid a predetermined and fixed amount that is not subject to reduction because of variations in the quality or quantity of work performed (the salary-basis test);
- Be paid at least a specified weekly salary level (the salary-level-test); and
- Primarily perform executive, administrative or professional duties, as provided in the U.S. Department of Labor's regulations (the duties test).
Increase to federal minimum salary requirement blocked
The minimum salary required for the EAP exemptions from overtime under federal law was set to increase from $844 per week to $1,128 per week on January 1, 2025. However, on November 15, 2024, a federal judge in Texas blocked the minimum-salary increase from taking effect nationwide. The decision also nullified the minimum-salary increase implemented on July 1, 2024. As such, the federal minimum salary required for the EAP exemptions from overtime reverts to $684 per week going forward. Employers that increased their exempt employees’ salaries to comply with the July 1, 2024 increase may want to discuss possible next steps with legal counsel.
Some states are increasing minimum salary requirements
Many states have their own salary and duties tests for determining whether an employee is exempt from overtime under state rules. Generally, if state law is more protective (i.e., requires a higher salary amount or has duties tests that are more difficult to satisfy), then state law should be followed.
After the federal court’s decision to block the federal changes, six states will have minimum salary requirements for overtime exemption that will increase on January 1, 2025 and will exceed the federal level of $684 per week. These changes are summarized below.
Alaska
To be classified as exempt from overtime under state law (Alaska Statute 23.10.055), bona fide administrative, professional and executive employees must satisfy certain salary and duties tests. As a result of a change in the state’s minimum wage, the minimum salary required for these exemptions under state law increases to $952.80 per week (twice the minimum wage for a 40-hour week) on January 1, 2025.
Note: Since voters approved a ballot measure to increase the state’s minimum wage to $13 per hour effective July 1, 2025, the state’s minimum salary required for exemption will increase again on that date, to $1,040 per week.
California
To qualify for the administrative, professional and executive exemptions in California, employees must meet certain salary and duties tests and must be paid at least twice the state minimum hourly wage based on a 40-hour week.
California's minimum wage will increase to $16.50 per hour on January 1, 2025, after voters in California rejected a ballot initiative that would have raised the minimum wage further.
As such, the minimum weekly salary required for the state’s administrative, professional and executive exemptions from overtime will increase to $1,320 per week on January 1, 2025.
Computer software employees may be paid on an hourly or a salary basis to qualify for exemption from California's overtime requirements. Beginning January 1, 2025, computer software employees must earn at least the following to be exempt from overtime in the state:
- $56.97 per hour (for all hours worked); or
- A monthly salary of $9,888.13; and
- An annual salary of $118,657.43
Colorado
In Colorado, employees must meet certain salary and duties tests to qualify for overtime exemption. As a result of the Colorado Overtime & Minimum Pay Standards Order, the minimum salary required to qualify for the executive/supervisor, administrative, and professional exemptions under state law will increase to $1,086.25 per week on January 1, 2025.
Under the state’s exemption for highly technical computer employees, the employee may be paid by salary (at least $1,086.25 per week in 2025) or by the hour. The minimum hourly rate for 2025 is $34.07 for these employees.
Note: In Colorado, an exempt employee’s salary generally must also be sufficient to satisfy the minimum wage for all hours worked in a workweek. This is true in certain other states as well, some of which will have a new minimum wage in 2025. Employers may want to consult legal counsel about how this rule may impact them.
Maine
To be classified as exempt from overtime under state law, administrative, professional and executive employees must satisfy certain salary and duties tests and receive a salary that exceeds 3,000 times the state minimum wage divided by 52. Due to an increase in the state's minimum wage, the minimum salary required for the administrative, professional and executive exemptions from overtime under state law will increase to $845.21 per week on January 1, 2025.
New York
To be classified as exempt from New York's overtime requirements, executive and administrative employees must meet minimum salary requirements and satisfy certain duties tests.
For these two exemptions, the state typically has set the minimum salary requirement at/or about 75 times the state minimum wage. The state’s minimum wage will increase on January 1, 2025.
As a result of the new minimum wage, the state is increasing the minimum salary requirement for the executive and administrative exemptions to $1,237.50 per week on January 1, 2025 in New York City and Nassau, Suffolk, and Westchester counties. In areas other than New York City and Nassau, Suffolk, and Westchester counties, the state will increase the minimum salary requirement for the executive and administrative exemptions to $1,161.65 per week on January 1, 2025.
Note: There is also a professional exemption under state law. For the professional exemption, employees must satisfy certain duties tests, but there is no minimum salary requirement under state law. Federal law currently establishes a minimum salary of $684 per week for the professional exemption. Employers seeking to classify employees as exempt from overtime should ensure employees meet both federal and state exemption criteria.
Washington
In Washington, employees must satisfy certain salary and duties tests to be classified as exempt from overtime under state law. As a result of a new state minimum wage, employers with 50 or fewer employees must pay a salary of at least $1,332.80 per week in 2025 for the overtime exemption. For larger employers, the minimum salary requirement for overtime exemption is $1,499.40 per week in 2025.
Note: Employers may pay exempt computer professionals by the hour, provided they pay at least $58.31 per hour in 2025.
Conclusion
Before classifying and treating any employee as exempt from overtime, employers should confirm that the employee satisfies all applicable tests for overtime exemption under federal and state laws. If an employee is covered by both federal and state law but doesn't meet both sets of tests, employers should consult with counsel to determine how they should classify the employee in that particular situation.