Overtime Exemption Salary Threshold Calculator

This tool helps you estimate whether an employee’s compensation appears to meet a chosen salary level threshold for overtime-exempt status. It focuses on the math of the salary level test and optional bonus credit. It does not decide whether a role is legally exempt or non-exempt under the Fair Labor Standards Act (FLSA) or any state law.

What this calculator checks (and what it does not)

Most white-collar overtime exemptions (such as executive, administrative, and professional) require that all of the following be satisfied:

• Paid on a salary basis (a fixed salary that does not vary with hours worked), and
• Paid at or above a minimum salary level (salary threshold), and
• Job duties that meet the applicable duties test.

This calculator only helps with the salary level piece. It compares the employee’s weekly pay (including eligible nondiscretionary bonus/commission credit) to a weekly salary threshold you supply. It does not evaluate salary basis, duties, hours worked, or any other legal requirements.

You must choose the correct weekly threshold for your situation (for example, the federal FLSA level or a higher state-specific level, and the right exemption category). Check current figures from government labor agencies, trusted HR resources, or your own legal advisors.

How the calculator works

The inputs represent an annual view of compensation that is converted into a weekly amount:

• Annual base salary – the fixed salary for the year, excluding discretionary bonuses. This is treated as guaranteed pay.
• Annual nondiscretionary bonus/commission – incentive amounts that are promised in advance or formula-based (for example, sales commissions or performance bonuses that must be paid when criteria are met).
• Weekly salary threshold to test – the required minimum weekly amount for the exemption and jurisdiction you are checking.
• Bonus credit cap (% of threshold) – the maximum share of the weekly threshold that can be satisfied with eligible bonuses/commissions under your rules (often up to 10%).

First, annual amounts are converted to weekly amounts using 52 weeks per year:

The same approach is used for bonuses:

Weekly bonus = Annual nondiscretionary bonus / 52

Bonus credit cap

Some rules allow a limited portion of the threshold to be met with nondiscretionary bonuses or commissions. The bonus credit cap expresses that limit as a percentage of the weekly threshold:

Maximum bonus credit per week = Threshold weekly pay × (Bonus cap % / 100)

The calculator then uses the lesser of:

• The weekly bonus amount, and
• The maximum bonus credit per week.

Any bonus beyond the cap does not increase the credited amount for meeting the threshold.

Overall comparison

The calculator estimates:

• Weekly base pay = Annual base salary / 52
• Weekly bonus credit used = min(weekly bonus, maximum bonus credit)
• Weekly total for threshold purposes = weekly base pay + weekly bonus credit used

This weekly total is then compared to the weekly salary threshold you entered to show whether the compensation appears to meet or fall short of that amount.

Worked example

Imagine an employee with the following compensation:

• Annual base salary: $50,000
• Annual nondiscretionary bonus: $5,200
• Weekly salary threshold to test: $1,000
• Bonus credit cap: 10%

Step 1: Convert to weekly base and bonus.

• Weekly base pay = $50,000 / 52 ≈ $961.54
• Weekly bonus = $5,200 / 52 = $100.00

Step 2: Determine the maximum bonus credit allowed.

10% of the $1,000 threshold is:

Maximum bonus credit = $1,000 × 0.10 = $100

Weekly bonus is $100, which equals the cap, so the full $100 counts toward the threshold.

Step 3: Compute the total weekly amount for threshold purposes.

Weekly total for threshold = $961.54 (base) + $100 (bonus credit) ≈ $1,061.54

Step 4: Compare to the weekly threshold.

• Weekly threshold to test: $1,000
• Weekly total for threshold: about $1,061.54
• Difference: about $61.54 above the threshold

In this example, the compensation appears to meet the chosen salary level threshold, assuming all other legal requirements are satisfied.

Interpreting your results

After you enter your figures, the results will typically indicate:

• Whether the weekly total for threshold purposes is above, at, or below the weekly threshold you entered.
• How much of the nondiscretionary bonus or commission actually counted toward the threshold, based on the bonus cap.
• By how many dollars the compensation appears to exceed or fall short of the threshold.

Some general interpretations:

• If the total is clearly above the threshold: the salary level test may be satisfied for that exemption and jurisdiction, but you still need to confirm the duties test, salary basis, and any state-specific rules.
• If the total is just barely above the threshold: even small changes (such as a reduced bonus or salary adjustment) could cause the role to fall below the required level. This may warrant closer review.
• If the total is below the threshold: the role is unlikely to qualify for that exemption on salary-level grounds alone, unless the threshold or exemption type has been misidentified.

Example comparisons

Salary thresholds can differ between federal and state rules, and between exemption types. The example below shows how pay that meets a lower threshold might not meet a higher one.

This illustrates why you must select the correct threshold for each role and location. Meeting one threshold does not guarantee meeting another.

Key assumptions and limitations

This calculator uses simplifying assumptions and is intended for educational and planning use only.

• It assumes a 52-week year and steady pay across the year.
• It assumes the employee is genuinely paid on a salary basis, separate from the amount entered.
• It assumes the threshold you enter is current, accurate for the jurisdiction, and appropriate for the exemption type (for example, executive vs. highly compensated).
• It assumes bonuses and commissions you enter are nondiscretionary and countable toward the threshold under applicable rules.
• It does not consider different lookback or catch-up mechanisms some rules allow for bonuses.
• It does not account for state-specific nuances, cost-of-living multipliers, or occupation-specific exemptions.
• It does not evaluate job duties, hours worked, classification history, or any other legal factors.

How HR and employees can use this tool

For HR and payroll teams

• Identify roles that may be close to a threshold and might need pay adjustments or reclassification.
• Model how changes to salary, bonus plans, or bonus caps could affect compliance with salary level rules.
• Prepare questions for counsel by quantifying how far above or below a threshold current pay sits.

For employees and managers

• Gain a high-level view of how your salary and eligible bonuses compare to a published threshold.
• Understand how much of your bonus may actually help satisfy the salary level requirement.
• Use the output as a starting point for discussions with HR or management, not as a legal conclusion.

Important disclaimer

This calculator and its outputs are general informational tools. They do not constitute legal, tax, or HR advice, and they do not create an attorney–client or advisory relationship. Overtime exemption status depends on multiple legal tests, detailed job duties, and sometimes state-specific or industry-specific rules that are not captured here.

Always consult with qualified HR professionals or legal counsel before making classification or pay decisions, especially when roles are near a threshold, work spans multiple jurisdictions, or rules are changing.

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.