Overtime Exemption Salary Threshold Calculator

Estimate whether compensation meets the salary level requirement for overtime-exempt status. This checks the salary threshold math only and helps HR teams and employees spot obvious misclassification risk.

Why the Salary Threshold Matters

Overtime rules are one of the most common sources of wage-and-hour disputes. In the U.S., many employees are entitled to overtime pay for hours worked over 40 in a workweek. Employers can classify certain employees as “exempt” from overtime if the job meets specific criteria. The classification affects pay, scheduling, and compliance risk. Misclassification can lead to back pay, penalties, and expensive litigation.

Exemption is usually not a single test. Under the federal Fair Labor Standards Act (FLSA), most “white collar” exemptions (executive, administrative, professional, certain computer employees, and outside sales) generally require some combination of:

• Salary basis test. The employee is paid on a salary basis (with limited permitted deductions).
• Salary level test. The salary meets a minimum weekly threshold.
• Duties test. The employee’s actual job duties fit the exemption definition.

This calculator focuses on the part that can be checked with straightforward arithmetic: the salary level threshold. It does not determine exemption by itself. A role can meet the salary threshold and still be nonexempt if duties do not qualify. Conversely, some roles (like outside sales) may be exempt without meeting a salary threshold depending on the rule set.

Federal vs State Rules

Many states have their own wage-and-hour laws. Some states adopt the federal framework; others set higher salary thresholds or different definitions. When state and federal rules differ, employers typically must follow the rule that is more protective of the employee. That is why an accurate “threshold check” should compare the employee’s weekly equivalent pay to both the federal and applicable state minimum, using whichever is higher.

Because thresholds change over time and differ by jurisdiction, this calculator does not hardcode a specific year’s dollar values. Instead, you enter the threshold you want to test against (for example, your current federal threshold and your state threshold), and the calculator performs the conversions and comparisons accurately.

Converting Pay to Weekly Salary

The salary level test is usually stated as a weekly amount. Many offers and payroll systems use annual salary. Converting accurately avoids mistakes. Let:

• A = annual base salary
• W = weekly base salary

The basic conversion is:

Some employers pay biweekly (26 pay periods) or semimonthly (24 pay periods). Those are simply different payment schedules; the weekly equivalent still comes from annual salary divided by 52. This calculator uses the weekly equivalent because that is what most threshold tests use.

Bonus Credit (When Allowed)

Some rules allow part of nondiscretionary bonuses and commissions to count toward meeting the salary threshold, usually up to a capped percentage (often 10%) and sometimes with a “catch-up” payment requirement. Not all states allow this, and the details vary. Because it can materially change classification risk, the calculator includes an optional “bonus credit” model you can toggle on:

• You enter annual nondiscretionary bonus/commission amount.
• You enter the maximum percent of the threshold that can be satisfied by bonus credit (default 0%, set to 10% if applicable).

This is a planning feature, not legal advice. If you rely on bonus credit, confirm the rule details for your jurisdiction and maintain proper payroll documentation.

The Threshold Decision Rule

Let T be the weekly salary threshold you are testing. Let W be weekly base salary and B be the weekly equivalent bonus credit (if allowed). Then the salary threshold is met if:

Worked Example

Suppose an employee earns $52,000 per year in salary and is being classified as exempt. Their weekly equivalent is $52,000 / 52 = $1,000/week. The applicable salary threshold is $1,058/week (example). Without bonus credit, the employee does not meet the salary level requirement.

Now suppose the rules allow up to 10% of the threshold to be satisfied by nondiscretionary bonuses, and the employee earns a $6,000 annual nondiscretionary bonus. Weekly bonus equivalent is $6,000 / 52 ≈ $115/week. But the bonus credit cap is 10% × $1,058 ≈ $106/week. Credited bonus is the smaller of the two: $106/week. Total credited pay becomes $1,000 + $106 = $1,106/week, which meets the threshold.

This illustrates why “bonus credit” can flip the result—but only if it is allowed and administered correctly.

Comparison Table: What This Check Can and Can’t Tell You

Highly Compensated Employee (HCE) Note

Some frameworks include a “highly compensated employee” pathway with a higher total annual compensation threshold and a simplified duties test. The details vary and can change with regulation. This calculator does not implement an HCE test because it depends on the current annual threshold and on which compensation elements count (salary vs nondiscretionary bonuses, commissions, etc.). If you are evaluating an HCE classification, you can still use this tool to confirm that the weekly salary component is strong, but you should verify the HCE rules separately.

Hourly-to-Salary Conversions (A Common Mistake)

Another frequent issue arises when someone is paid hourly but treated like a salaried exempt employee in practice. A quick conversion is to multiply hourly rate by expected hours per week (often 40) to get weekly earnings, then compare to the threshold. But this can hide risk: if hours fluctuate downward, weekly pay can fall below the threshold. If you are trying to use salary threshold rules, a stable salary basis arrangement is typically required. Use the calculator with the weekly equivalent of guaranteed pay, not optimistic hours.

Practical Compliance Tips

• Track effective date changes. Thresholds can change mid‑year; apply the correct threshold for the period.
• Use the higher threshold. If your state threshold is higher than federal, the higher one usually governs.
• Document your math. Keep a simple worksheet showing annual-to-weekly conversion and any bonus credit cap.
• Don’t ignore duties. Salary threshold checks catch only obvious mismatches.

Limitations and Assumptions

This tool checks only the salary threshold component. It assumes:

• You entered the correct threshold(s) for the time period and jurisdiction.
• Annual salary is paid evenly and can be converted using 52 weeks.
• Bonus credit (if used) follows the permitted cap you enter.
• No duties test or special occupational rules are evaluated.

Use this calculator to catch obvious salary-level mismatches and to document how you computed weekly equivalents. For classification decisions, consult HR counsel or authoritative government guidance.