Your employer calls you “exempt.” Your offer letter says “administrative.” You receive a salary instead of an hourly wage, and when you work 50 or 60 hours in a week, your paycheck stays the same. You’ve been told — or simply assumed — that salaried employees don’t qualify for overtime.
That assumption is wrong in a great many jobs. The Fair Labor Standards Act requires overtime at “a rate not less than one and one-half times the regular rate” for hours over forty in a workweek.1 The administrative exemption is one of the exemptions written into section 13(a)(1) of the Act, which lifts the overtime requirement for employees “employed in a bona fide executive, administrative, or professional capacity . . . (as such terms are defined and delimited from time to time by regulations of the Secretary).”2 Employers label workers exempt by calling their positions “administrative” even when the duties those workers actually perform do not meet the regulatory test.
This article explains the law behind the administrative exemption: what the test requires, how the Department of Labor’s regulations define each element, how federal courts have applied them, and why workers in healthcare, social services, and other industries are being denied overtime pay they have legally earned. If you are a case manager, care coordinator, or any worker whose employer claims you are exempt under the administrative exemption, this is the legal framework that determines whether that classification is correct.
The FLSA’s default rule is straightforward: employers must pay overtime — one and one-half times your regular rate of pay — for every hour you work beyond 40 in a workweek.1 The exemptions are exceptions to that rule, and the employer is the party that has to prove one applies.
One point of law here is commonly stated wrong, including on lawyers’ websites, so it is worth getting right. Courts used to say FLSA exemptions must be construed narrowly against the employer. In 2018 the Supreme Court discarded that canon: “Because the FLSA gives no ‘textual indication’ that its exemptions should be construed narrowly, ‘there is no reason to give [them] anything other than a fair (rather than a “narrow”) interpretation,’” and courts have “no license to give the exemption anything but a fair reading.”3 Then in 2025 the Court settled the standard of proof: “the preponderance-of-the-evidence standard applies when an employer seeks to show that an employee is exempt.”4 What survives both decisions is the allocation: “The law places the burden on the employer to show that an exemption applies.”4 A page that tells you doubt gets resolved in your favor is selling you something. The real point is narrower and more useful — the employer has to prove every element, and on these jobs the regulations themselves are what defeat it.
The administrative exemption, codified at 29 CFR 541.200(a), applies only to an employee who meets all three of the following requirements:5
All three must be satisfied. If the employee fails any one of them, the exemption does not apply and the employee is entitled to overtime pay. The two duties requirements are where most classifications come apart.
The first requirement is a pay threshold. An employee must be compensated on a salary basis “at a rate of not less than $684 per week” to be eligible for the exemption.6 The regulation translates the figure for longer pay periods — “biweekly on a salary basis of not less than $1,368, semimonthly on a salary basis of not less than $1,482, or monthly on a salary basis of not less than $2,964” — but “the shortest period of payment that will meet this compensation requirement is one week.”6
That figure comes from the Department of Labor’s 2019 rule, which “raised the salary level from $455 per week to $684 per week (equivalent to $35,568 per year for a full-year worker).”7 It is the level currently in the Code of Federal Regulations.6
A critical point many workers miss: meeting the salary threshold does not make you exempt. It satisfies one of three requirements. Employers pay a salary above the threshold and stop the analysis there, telling employees they are “salaried exempt” as if the salary alone resolved the question. It does not. The duties requirements are the harder ones — and they are where most misclassifications fall apart.
Being paid on a “salary basis” has its own definition: the employee “regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.”8 An exempt employee “must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked,” and deductions “may not be made for time when work is not available” if the employee is ready, willing and able to work.8
Docking pay can cost the employer the exemption, but not automatically. “An employer who makes improper deductions from salary shall lose the exemption if the facts demonstrate that the employer did not intend to pay employees on a salary basis,” and “[a]n actual practice of making improper deductions demonstrates” that intent; the loss then runs “during the time period in which the improper deductions were made for employees in the same job classification working for the same managers.”9 Deductions that are “isolated or inadvertent” do not cost the exemption if the employer reimburses them.9 For a deeper analysis of salary issues, see our guide on salary vs. hourly pay under the FLSA.
This is the element that trips up most employer classifications, and it is the heart of the administrative exemption analysis. The regulation is explicit about what the phrase means: “an employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment.”10
That single sentence is the administrative-production dichotomy. Every organization has two broad categories of work:
Only workers whose primary duties fall on the administrative side can qualify. Workers on the production side — the people doing the work the employer exists to perform — are not administratively exempt, whatever the job title says.
The regulation lists the functional areas it has in mind. Work directly related to management or general business operations “includes, but is not limited to, work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations, government relations; computer network, internet and database administration; legal and regulatory compliance; and similar activities.”11
Notice what those functions have in common: they serve the business itself. An HR director at a hospital is not treating patients — she is running a business function. An accountant at an insurance company is not managing claims — he is keeping the books. Their work is “directly related to management or general business operations” because it supports the infrastructure of the organization rather than delivering the organization’s core service.
Now consider a case manager at a managed care organization. What does the employer exist to do? It coordinates services, conducts assessments, develops care plans, and decides whether requested care is covered. The case manager is not supporting that business from behind the scenes. The case manager is that business. The case manager’s work is the service the employer delivers to its customers.
A federal court reached exactly that conclusion about utilization review nurses at a health insurer. Reviewing authorization requests, the court held, put those nurses on the production side: “The record reflects that NMMs operate more similarly to production line workers than to business consultants who manage or service the customer’s business.” The court spelled out why: “While NMMs’ medical necessity decisions play a part in customer operations by determining insurance payment authorizations, they do not engage in direct business management activities . . . NMMs’ work product is their response to an authorization request.” Because of that, the employer “does not meet the initial requirement for the administrative” exemption.12
The same analysis applies to care coordinators, utilization review nurses, social workers at child welfare agencies, and other workers whose primary duty is performing the core service the employer provides. When a managed care company classifies its case management staff as administratively exempt, it is conflating the production of its services with the administration of its business.
One caution, because it matters to how these cases are argued. The production-side point is not a free pass for everyone who touches a claim file. The regulations say the opposite about one job in particular: “Insurance claims adjusters generally meet the duties requirements for the administrative exemption . . . if their duties include activities such as interviewing insureds, witnesses and physicians; inspecting property damage; reviewing factual information to prepare damage estimates; evaluating and making recommendations regarding coverage of claims; determining liability and total value of a claim; negotiating settlements; and making recommendations regarding litigation.”13 The distinction that does the work is authority. The Fifth Circuit drew it in a case about health plan case managers: those employees “exercise significantly less discretion than the insurance claims adjusters,” because when a request failed the criteria they “did not have the authority to deny the request, but were instructed to refer the case to a Medical Director,” and they did not “advise[],” “represent[]” or “negotiate[]” on the company’s behalf.14 If you cannot deny, cannot negotiate, and cannot bind your employer, the adjuster example in the regulation is not your example.
Even where an employee’s work is directly related to management or general business operations, the employee’s primary duty must also include the exercise of discretion and independent judgment with respect to matters of significance. That phrase has a specific regulatory meaning that goes well beyond everyday decision-making.
The definition is in the regulation: “In general, the exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered. The term ‘matters of significance’ refers to the level of importance or consequence of the work performed.”15 That wording matters in practice. A job built around reaching a single correct answer — approve or refer, meets criteria or does not — is not a job built around comparing and evaluating possible courses of conduct.
The regulation then lists factors, among them “whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices”; “whether the employee carries out major assignments in conducting the operations of the business”; “whether the employee has authority to commit the employer in matters that have significant financial impact”; “whether the employee has authority to waive or deviate from established policies and procedures without prior approval”; “whether the employee has authority to negotiate and bind the company on significant matters”; and “whether the employee is involved in planning long- or short-term business objectives.”16
One qualification that honest analysis has to include, because employers raise it and because it is in the text: review by someone senior does not by itself defeat the exemption. “[E]mployees can exercise discretion and independent judgment even if their decisions or recommendations are reviewed at a higher level,” and the term “does not require that the decisions made by an employee have a finality that goes with unlimited authority and a complete absence of review.”17 The argument for workers is not “someone checked my work.” It is that the work itself consisted of applying someone else’s criteria.
The regulation is equally specific about what falls outside the definition:
The regulation also names three jobs that illustrate the line, and each one describes work that looks a great deal like case review. “Ordinary inspection work generally does not meet the duties requirements,” because inspectors “normally perform specialized work along standardized lines involving well-established techniques and procedures which may have been catalogued and described in manuals or other sources” and “have some leeway in the performance of their work but only within closely prescribed limits.” Employees “usually called examiners or graders” generally do not qualify either, because they “perform work involving the comparison of products with established standards which are frequently catalogued” — and “[t]he substitution of the employee’s memory for a manual of standards does not convert the character of the work performed to exempt work.” Public sector inspectors and investigators generally do not qualify because their work “involves the use of skills and technical abilities in gathering factual information, applying known standards or prescribed procedures, determining which procedure to follow, or determining whether prescribed standards or criteria are met.”21
An employee can be highly skilled, college-educated, and making consequential decisions every day and still not meet this requirement. The test is not whether the employee uses judgment. It is whether the employee’s primary duty includes comparing and evaluating possible courses of conduct on matters of significance to the business, rather than applying criteria written by someone else.
Consider what a typical case manager actually does day to day. She reviews patient charts, applies standardized assessment tools, develops care plans based on clinical guidelines and established protocols, coordinates services within parameters set by insurance contracts and regulatory requirements, and documents her work according to employer policies.
Does she use professional judgment? Absolutely. But the regulatory question is different. The Fifth Circuit held that health plan case managers’ responsibilities “more closely resemble ‘[o]rdinary inspection work,’ 29 C.F.R. § 541.203(g), a job that the regulations explicitly exclude from the administrative exemption,” because by “examining medical information and applying it to utilization review guidelines” they “carry out inspector-type duties.” The court added that the employer’s “entire utilization review process seems designed to minimize the amount of discretion and independent judgment employed by Case Managers.”14 A district court reached the same conclusion about utilization review nurses, finding they “use well-established materials to complete their work, rely on skills acquired through training on the job, and operate within a governing program built to ensure the worker makes the correct response to an authorization request,” and that “[u]nder § 541.704, that work does not qualify as exempt.”12
The same analysis reaches workers across industries who follow standardized processes, apply established criteria, and work within frameworks built by others — even when they exercise real professional skill in doing so.
Under the FLSA, the employer bears the burden of proving that an exemption applies. The employee does not have to prove that they are non-exempt.4
In January 2025 the Supreme Court decided what that burden weighs. It held that “the preponderance-of-the-evidence standard applies when an employer seeks to show that an employee is exempt from the minimum-wage and overtime-pay provisions of the Fair Labor Standards Act” — rejecting the stricter clear-and-convincing standard that one circuit had applied.4 The employer still has to carry that burden on every element of the exemption, and on these jobs that means proving the type of work and the discretion, not one or the other.
What the burden no longer comes with is a thumb on the scale. The narrow-construction canon is gone, and the exemption gets “a fair reading.”3 That change is not fatal to these claims, and courts deciding them after 2018 have said so by applying the fair-reading instruction and still ruling for the workers: “Courts are instructed to interpret FLSA exemptions in a balanced manner, neither too narrowly nor with bias towards either employees or employers” — and on that instruction the utilization review nurses in that case won on both exemptions the employer asserted.12 The text of the regulations is what carries the argument.
A worker deciding whether to bring a claim should know the authority that runs the other way.
The regulations themselves put insurance claims adjusters inside the exemption, as described above, and employers lean on that example whenever a job involves reviewing a file against criteria.13 Employers also cite a 2007 Tenth Circuit decision holding a social services “family advocate” administratively exempt. That court found her work “cannot be likened to the type of work performed on a manufacturing production line” and that she made, in the district court’s words, “game-time” decisions in supporting client families. Two features limit the decision: it is an unpublished order and judgment that “is not binding precedent, except under the doctrine of law of the case, res judicata, and collateral estoppel,” and it applied the pre-2004 regulations — 29 C.F.R. §§ 541.214, 541.205 and 541.207 (2002) — not the current §§ 541.200 to 541.202.22
None of this is decided by slogans on either side. These cases turn on the specific record about a specific job: what criteria you apply, who wrote them, what you are allowed to decide, and what you have to escalate.
Some misclassifications come from genuine confusion about a complicated test. Others follow patterns that recur across employers. Knowing the patterns helps you recognize when your own classification may be wrong.
A common pattern is a job description that bears little resemblance to the work performed. The description emphasizes “strategic planning,” “independent decision-making” and “management of business operations” while the employee’s day consists of processing cases, following protocols, and completing documentation.
The regulations do not let the paperwork decide. Primary duty “must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole,” and the listed factors are about what the employee does — the relative importance of the exempt duties, the amount of time spent on exempt work, the employee’s relative freedom from direct supervision, and the relationship between the employee’s salary and the wages paid to others for the nonexempt work the employee performs.23
Employers also assign titles suggesting more authority than the position carries. “Case Management Director,” “Administrative Coordinator,” “Program Manager” — none of it changes what the employee does. The regulation says so in one sentence: “A job title alone is insufficient to establish the exempt status of an employee. The exempt or nonexempt status of any particular employee must be determined on the basis of whether the employee’s salary and duties meet the requirements of the regulations in this part.”24
This pattern is common in healthcare and social services. An employer requires applicants to hold a master’s degree — an MSW, an MA in counseling, or a similar credential — for a position that could be performed with a bachelor’s degree. The employer then argues that the degree requirement makes the employee a learned professional, exempt under a different subsection.
A degree requirement does not decide that question either. The learned professional exemption requires that the employee’s primary duty be “the performance of work requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction,” and “work requiring advanced knowledge” means work “predominantly intellectual in character . . . as distinguished from performance of routine mental, manual, mechanical or physical work.” The exemption “is not available for occupations that customarily may be performed with only the general knowledge acquired by an academic degree in any field.”25 So if the assessments, care plans and coordination could be performed by a bachelor’s-level worker following the same protocols, the degree requirement is a hiring preference, not proof that the exemption applies.
The regulations also draw a line inside nursing that employers sometimes blur: “Registered nurses who are registered by the appropriate State examining board generally meet the duties requirements for the learned professional exemption. Licensed practical nurses and other similar health care employees, however, generally do not qualify as exempt learned professionals because possession of a specialized advanced academic degree is not a standard prerequisite for entry into such occupations.”26
Many large employers — particularly in healthcare and managed care — apply a single classification to an entire category of workers. Every case manager is exempt. Every care coordinator is exempt. No individualized analysis of what any of them actually does.
That practice cuts against the employer in two ways. It is the evidence workers point to in arguing the violation was willful, which lengthens the limitations period from two years to three.27 And because the classification is uniform, so is the proof, which makes the claim suited to a collective action on behalf of everyone in the category.
Courts have issued notice to groups defined by exactly this kind of company-wide classification. One court conditionally certified “[a]ll salaried Disability Benefits Specialists” at a disability insurer “whose job duties included processing disability claims using the guidelines in Unum’s Benefit Center Claims Manual,” rejecting the employer’s attempt to defeat notice with the administrative exemption itself: “a defendant’s assertion of the potential applicability of an exemption [at the first stage] should not be permitted to overcome an otherwise adequate threshold showing by the plaintiff.”28 Another, on the parties’ consent, certified “[a]ll current and former employees employed in the Care Coordinator-Non-RN position . . . who were paid on a salary basis.”29
In April 2024 the Department of Labor published a rule that would have raised the threshold in two steps, “with the salary level slated to increase to $844 per week on July 1, 2024, further rise to $1,128 per week on January 1, 2025,” plus “automatic triennial updates to the earnings thresholds.”7
Courts struck it down. “On November 15, 2024, the U.S. District Court for the Eastern District of Texas issued an order vacating the 2024 rule,” and “[o]n December 30, 2024, the U.S. District Court for the Northern District of Texas likewise issued an order vacating the 2024 rule.” Those “orders remain final judgments following the dismissal of the appeal in each case by the U.S. Court of Appeals for the Fifth Circuit on May 5 and 7, 2026.” The Department then amended the Code of Federal Regulations to match, “removing from the Code of Federal Regulations (CFR) the regulatory text from the now-vacated 2024 rule and republishing in its place the regulatory text as it existed prior to the effective date of that rule,” effective May 15, 2026.7 The $684 weekly figure is what the regulation now says.6
For workers that means two things. Anyone paid less than the threshold on a salary basis is outside the exemption on the pay element alone, whatever their duties. And clearing the threshold still resolves nothing about duties — which is where most administrative exemption claims are decided.
If you are classified as exempt under the administrative exemption, the framework above gives you a way to evaluate that classification. Three questions:
If the answers suggest you do not meet the test, your employer may owe you overtime for every hour you worked beyond 40 in a workweek, going back two or three years.27
The statute sets out the remedies:
One mechanical point about collective actions: “No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.”30 Until that consent is filed, the limitations period continues to run.
Often, yes. A salary satisfies one of three requirements, and only at or above “not less than $684 per week.”6 The employer still has to prove your primary duty is office or non-manual work directly related to management or general business operations and that it includes the exercise of discretion and independent judgment with respect to matters of significance.5
No. “The exercise of discretion and independent judgment must be more than the use of skill in applying well-established techniques, procedures or specific standards described in manuals or other sources.”18 Skill is not the test. The regulation asks whether your primary duty involves “the comparison and the evaluation of possible courses of conduct” on matters of significance.15
Not by itself. “[E]mployees can exercise discretion and independent judgment even if their decisions or recommendations are reviewed at a higher level.”17 The stronger point is what the decision consists of. Where a worker cannot approve an exception, cannot deny a request, and has to refer anything outside the criteria, courts have found no discretion on matters of significance.14
It can be the center of it. Using reference material on genuinely complex matters does not defeat the exemption, but “[t]he section 13(a)(1) exemptions are not available . . . for employees who simply apply well-established techniques or procedures described in manuals or other sources within closely prescribed limits to determine the correct response to an inquiry or set of circumstances.”20
No, and anyone who tells you otherwise is working from law that changed. Exemptions get “a fair reading,” not a narrow one,3 and the employer proves its case by a preponderance of the evidence.4 The burden is still the employer’s on every element,4 and courts applying the fair-reading instruction have still held utilization review nurses non-exempt.12
Two years, or three if the violation was willful.27 In a collective action the limitations period continues to run until your written consent is filed with the court.30
Siegel Law Group PLLC represents workers — never employers — in FLSA overtime and wage cases. Our practice concentrates on misclassification claims brought by case managers, care coordinators, utilization review staff, and other workers in managed care and healthcare classified as exempt. We handle administrative exemption cases in other industries where the same analysis applies.
The work is the regulations, the Department of Labor’s interpretations, the case law on each element, and the records that show what a job actually consists of.
If you believe you have been misclassified as exempt under the administrative exemption, contact Siegel Law Group for a free, confidential consultation. The call takes about 10 minutes. We will review your situation, explain your rights under the FLSA, and tell you honestly whether you have a case — at no cost and no obligation. Call (214) 790-4454 or email [email protected]. Siegel Law Group PLLC, Dallas, Texas.
Overtime pay isn’t a perk. It’s the law — and if your employer isn’t following it, you have the right to hold them accountable.
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Attorney advertising. Jack L. Siegel of Siegel Law Group PLLC, Dallas, Texas, is responsible for this content.
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