Yes. Being paid a salary does not by itself remove your right to overtime. A salaried employee is entitled to overtime where the employee is covered by one of the overtime laws, is not exempt under the law that applies, and works more than the applicable overtime threshold.
The confusion comes from treating “salaried” and “exempt” as the same word. They describe different things. A salary is a method of payment. An exemption is a legal conclusion about a job, and it requires more than the method of payment to support it.
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Salary Is One Test of Three, Not a Category
The standard federal executive, administrative, learned professional and creative professional tests generally require a salary basis, a salary level of at least $684 per week, and a duties test. All three have to be met, and failing any one leaves the employee nonexempt whatever the pay method. Different compensation rules apply to some categories: the salary requirements do not reach teachers or employees licensed and actually practicing law or medicine, outside sales employees have no salary requirement, and certain computer employees may qualify at an hourly rate of not less than $27.63.
Under Minnesota law the analysis runs through Minn. Stat. § 177.23, subd. 7, clause (6) and the tests at Minn. R. 5200.0190 to 5200.0210. Those tests also contain salary elements, at $250 or $155 per week depending on the test used, and $170 for professional test II. Because the Minnesota thresholds are much lower than the current federal standard, duties will often be the more contested element under state law, but the applicable salary requirement still has to be satisfied.
So a salaried employee in Minnesota can be nonexempt under federal law, under state law, or under both. Each produces an overtime entitlement at its own threshold.
What a Salary Has to Look Like
Minnesota’s rules define the term, and the definition has consequences.
Minn. R. 5200.0211 provides that a salary is not an hourly rate. An employee is paid a salary if, through agreement with the employer, the employee is guaranteed a predetermined wage for each workweek. The rule allows deductions for complete days of absence for reasons other than no work being available, and allows complete weeks in which no work is performed to be deducted.
The consequence sits in the same rule. Where deductions reduce the salary for a workweek below the minimum required by the statute or by the exemption tests, the employer loses the exemption for that workweek. An employee treated as exempt is then nonexempt for that week and is owed overtime for the hours worked above the applicable threshold.
Federal law works on the same principle through the salary basis requirement, which asks whether the employee regularly receives a predetermined amount not subject to reduction because of variations in the quality or quantity of work performed.
Deductions That Can Undercut an Exemption
Certain payroll practices are inconsistent with paying a true salary, and they show up on earnings statements.
Docking a partial day for arriving late or leaving early, deducting for a slow week or a period when the employer had no work available, reducing pay because of the quality of the work, and charging the employee for cash register shortages or damage are the recurring examples. Minn. R. 5200.0090 separately prohibits deductions from the minimum wage for shortages, uniforms, consumable supplies, travel expenses, spoilage, breakage, cash shortages, walkouts, bad checks and disciplinary fines.
A single improper deduction does not automatically mean the employee was nonexempt for the whole period. What it does is put the exemption in question for the workweek involved and raise whether the employer was in fact treating the pay as a guaranteed weekly amount.
How Overtime Is Figured for a Salaried Nonexempt Employee
When a salaried employee is nonexempt, the salary has to be converted into a regular rate before overtime can be calculated.
Minn. R. 5200.0130 supplies the state method: the regular rate is determined by dividing the employee’s remuneration in the workweek by the total hours worked. The Department of Labor and Industry states the rule the same way.
Under federal law the divisor depends on what the salary was understood to cover. Where the salary was intended to compensate a fixed schedule, that number of hours is the divisor and each overtime hour carries the full 1-1/2 premium. Where the arrangement satisfies the conditions in 29 CFR 778.114, the fluctuating workweek method applies and the premium is an additional one-half of the regular rate for each overtime hour, because the salary has already paid the straight time for all hours.
That method is not available by default. It requires hours that actually fluctuate, a fixed salary that does not vary with hours worked, a salary high enough to cover at least minimum wage in the longest weeks, and a clear and mutual understanding that the salary is compensation for whatever hours the job requires.
Take an employee paid a $1,000 weekly salary who works 46 hours in a week and is covered by the 40-hour threshold.
| Salary covers a 40-hour schedule | Fluctuating workweek method | |
| Regular rate | $1,000 ÷ 40 = $25.00 | $1,000 ÷ 46 = $21.74 |
| Premium owed per overtime hour | $25.00 × 1.5 = $37.50 | $21.74 × 0.5 = $10.87 |
| Overtime hours | 6 | 6 |
| Additional pay owed | $225.00 | $65.22 |
| Week total | $1,225.00 | $1,065.22 |
The gap between those two columns is why the conditions on the fluctuating workweek method matter, and why an employer using it should be able to point to the understanding that supports it.
The Salary Level Is Not the Whole Question
An employee paid well above $684 a week can still be nonexempt, because the duties test is independent of the salary.
A senior title, a good salary and long hours describe a lot of jobs that remain entitled to overtime. What the federal executive test asks is whether the primary duty is management, whether the employee customarily and regularly directs the work of two or more full-time employees or their equivalent, and whether the employee has authority to hire or fire or make recommendations given particular weight. The administrative test asks whether the primary duty is office or non-manual work directly related to management or general business operations, including the exercise of discretion and independent judgment on matters of significance.
The state tests ask their own versions of those questions, with the 20 percent and 40 percent caps on nonexempt work adding a measurable element the federal test does not state in the same way.
Signs Worth Looking At
Several things are worth checking on your own records before deciding whether there is anything here.
Whether your hours were tracked at all, and if so, whether the record matches what you worked. Whether your pay ever changed with your hours, in either direction. What proportion of your week went to the same work your hourly coworkers did. Whether you actually supervised anyone, and whether your recommendations about them were followed. Whether the employer deducted for partial days, slow periods or shortages.
None of those is decisive on its own. Together they describe whether the job was being treated as exempt on paper while operating as a nonexempt job in practice.
What to Do If You Are Salaried and Working Long Weeks
Keep the documents that establish the two halves of the question: what you were paid and what you did.
Earnings statements establish the pay and, under Minn. Stat. § 181.032, must show your rate or rates of pay and the basis on which you are paid, gross pay and each deduction. Total hours worked must also appear unless the employee is exempt from chapter 177, so a statement showing no hours may reflect the employer’s exemption position rather than an oversight. The written notice you received at the start of employment records what the employer said your rate would be. Your own contemporaneous notes of hours and duties fill the gap where no timekeeping record exists, and starting one now is more useful than reconstructing later.
Our pages on unpaid wage claims in St. Paul and Minnesota employment law explain what a claim involves, and our page on exempt and non-exempt classification covers how the categories are drawn.
Frequently Asked Questions
My offer letter says I am exempt. Does that settle it?
No. An exemption is a conclusion about the job measured against a legal test, and neither an offer letter nor a signed acknowledgment can create one where the test is not met. Minn. Stat. § 177.27, subd. 8 also provides that an agreement to work for less than the applicable wage is not a defense to a claim.
Can my employer deduct from my salary when I take a half day?
Deducting for a partial day is inconsistent with paying a guaranteed weekly amount, and Minn. R. 5200.0211 permits deductions for complete days of absence rather than partial ones. Where deductions push the weekly salary below the level the exemption requires, the rule provides that the employer loses the exemption for that workweek.
I am salaried and nonexempt. Is my overtime calculated on my salary?
It is calculated on the regular rate derived from your pay for the week. Under Minn. R. 5200.0130 that is your remuneration for the workweek divided by the hours you worked. Which federal method applies depends on what the salary was understood to cover, and that understanding is worth establishing from the documents rather than assumed.
Does my employer have to track my hours if I am salaried?
For employers subject to Minn. Stat. §§ 177.21 to 177.44, § 177.30 requires records including hours worked each day and each workweek, and Minn. R. 5200.0100 provides that “hours worked each day” includes beginning and ending times. If an employer treated you as exempt and therefore did not keep those records, that absence becomes relevant if the exemption is later found not to apply.
How far back can a salaried overtime claim reach?
Minn. Stat. § 541.07, clause (5) gives a state claim two years, stretching to three if the employer missed a department deadline for producing payroll records or the underpayment was willful rather than a mistake. A federal claim runs on a similar two-year clock, extended to three only for willfulness. Neither clock waits for the job to end — both start running from the violation itself.
This article provides general information about Minnesota and federal overtime law and is not legal advice. Whether a salaried employee is exempt depends on the duties of the job and the way the salary was paid. Confirm current requirements with the Minnesota Department of Labor and Industry, the U.S. Department of Labor or an attorney.
