Exempt vs. Non-Exempt in NYC: Salary, Duties, and Overtime

In New York City, the difference between exempt and non-exempt comes down to two tests an employer has to pass at the same time: a salary threshold and a job duties analysis. As of January 1, 2026, an exempt executive or administrative employee in NYC must be paid at least $1,275 per week, or $66,300 per year, and must actually perform the kind of work the law recognizes as exempt.¹ If either piece is missing, the worker is non-exempt and legally entitled to overtime, minimum wage, and additional New York protections.

Getting this wrong is expensive. Under New York law, a misclassified employee can recover up to six years of unpaid wages plus liquidated damages that can double the bill.

The Salary Threshold

The NYC threshold is much higher than the federal one. Federal law under the Fair Labor Standards Act still sets the exempt salary floor at $684 per week ($35,568 annually), after a federal court vacated the U.S. Department of Labor’s 2024 attempt to raise it.² New York City requires $1,275 per week for any size employer as of January 1, 2026.¹

A dollar under $1,275 makes the employee non-exempt, no matter what the job title says. The pay also has to be on a true salary basis, meaning the employee receives the full predetermined amount for any week in which they perform any work. An employer cannot cut that amount because the workload dipped or the quality slipped.³

Deductions are tightly restricted. Docking is allowed for full-day personal absences and for full-day disciplinary suspensions imposed in good faith for workplace conduct violations. Deductions for partial-day absences or for work quality are not allowed. Employers who routinely make improper deductions can lose the exemption for the entire class of affected employees, not just the individual short-changed.³

The Duties Test

Clearing the salary bar is only half the analysis. The employee’s actual day-to-day work also has to fit one of the recognized exemption categories. A job title alone never determines exempt status; the law looks at what the person actually does.⁴ This is where misclassification most often happens.

Executive Exemption

The employee’s primary duty must be managing the business or a recognized department within it. They must regularly direct at least two full-time employees or the part-time equivalent. And they must have genuine authority to hire or fire, or their recommendations on hiring, firing, and promotions must carry real weight.⁵ A shift supervisor who relays schedules but has no real say in staffing does not qualify, even if a dozen workers report to them.

Administrative Exemption

This covers employees whose primary duty is office or non-manual work directly tied to management or general business operations, and who regularly exercise independent judgment and discretion on matters of significance to the company.⁶ It’s the most litigated exemption because the line between exercising discretion and following established procedures is blurry. A human resources manager developing company policy likely qualifies. An administrative assistant processing paperwork according to a template does not, even though both perform “office work.”

Professional Exemption

The learned professional exemption applies when the employee’s primary work requires advanced knowledge in a field of science or learning, typically gained through extended, specialized education. The work must be mainly intellectual and require consistent independent judgment.⁷ Attorneys, physicians, engineers, and architects are classic examples. Skilled tradespeople whose expertise comes from apprenticeship or on-the-job training generally do not meet this test.

Computer and Outside Sales

Two other exemptions come up often in NYC and follow their own rules. Systems analysts, programmers, and software engineers may be exempt if their primary work involves designing, developing, testing, or documenting computer systems or programs. They can be paid on salary at the standard threshold or hourly at $27.63 or more per hour, though for salaried computer professionals in NYC the $1,275 weekly figure is usually the controlling number.⁸ Workers whose primary duties involve hardware repair, operating computers, or entering data do not qualify.

The outside sales exemption has no minimum salary requirement at all. The employee’s primary duty must be making sales or obtaining contracts, and that work must regularly happen away from the employer’s place of business, at client sites or on the road.⁹ Sales made by phone, email, or online do not count, even from a home office. A home office used for phone solicitation is treated as the employer’s place of business.

What Non-Exempt Workers Are Entitled To

If you don’t meet both tests, you’re non-exempt, and New York law gives you a strong set of wage protections.

Minimum Wage and Overtime

Every non-exempt worker in New York City must be paid at least $17.00 per hour as of January 1, 2026.¹⁰ When total hours in a workweek exceed 40, the employer must pay overtime at one and a half times the employee’s regular rate.¹¹

The “regular rate” is where employers often trip up. It isn’t just the base hourly wage. Non-discretionary bonuses, shift differentials, and commissions earned during the workweek all have to be folded into the calculation before the overtime multiplier is applied.¹² Someone earning a $20 base plus a $200 weekly production bonus has a regular rate higher than $20, and their overtime rate rises with it.

Spread-of-Hours Pay

New York adds a protection that doesn’t exist under federal law. If a non-exempt employee’s workday spans more than 10 hours from start to finish, including meal breaks and any gap between shifts, the employer owes one additional hour of pay at the basic minimum wage rate. It applies even when the employee didn’t work that entire stretch continuously.¹³ Clock in at 8 a.m., leave at 7 p.m. with an unpaid lunch, and the spread is 11 hours. That extra hour of pay is owed on top of the regular wages.

How to Check Your Own Classification

Run through both tests yourself. First, look at your gross weekly pay. If you earn less than $1,275 per week on salary, you should be non-exempt and earning overtime, full stop.¹

If your salary clears the threshold, look at your actual daily work. Do you manage a team of at least two people and have meaningful input on hiring and firing? That’s the executive test. Do you exercise real independent judgment on business decisions that matter, rather than following a set process? That’s the administrative test. Do you need an advanced degree in a specialized field to do your job? That’s the professional test.⁴ If neither your salary nor your actual duties line up with an exemption, you’re likely owed overtime.

If You’ve Been Misclassified

Calling someone exempt on paper when they don’t qualify is one of the most expensive employment mistakes an NYC business can make. Under New York Labor Law, an employee can recover the full amount of unpaid overtime and minimum wages going back six years. On top of that, the employer faces liquidated damages of up to 100% of the unpaid wages, effectively doubling the bill, unless the employer can prove a good-faith belief that it was in compliance. For willful violations of the state’s equal pay provisions, liquidated damages can reach 300%.¹⁴ The employee also recovers attorney’s fees and prejudgment interest.

Misclassification claims often arrive as collective or class actions, multiplying back-pay and damages across every similarly situated employee. Individual owners and managers with operational control over pay decisions can face personal liability for the full amount owed, not just the company. The FLSA defines “employer” broadly enough to include anyone who controls hiring, sets schedules, or determines pay methods.

Workers who believe they’ve been misclassified can file a complaint with the New York State Department of Labor or bring a private lawsuit. Filing with the DOL does not prevent a court action. Given the six-year lookback and the liquidated damages available, even workers who left a job years ago may still have a viable claim.¹⁵

1
New York State Department of Labor. Minimum Wage Frequently Asked Questions
2
U.S. Department of Labor. Earnings Thresholds for the Executive, Administrative, and Professional Exemption
3
U.S. Department of Labor. Fact Sheet 17G: Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act
4
U.S. Department of Labor. Fact Sheet 17A: Exemption for Executive, Administrative, Professional, Computer and Outside Sales Employees Under the Fair Labor Standards Act
5
U.S. Department of Labor. Fact Sheet 17B: Exemption for Executive Employees Under the Fair Labor Standards Act
6
U.S. Department of Labor. Fact Sheet 17C: Exemption for Administrative Employees Under the Fair Labor Standards Act
7
U.S. Department of Labor. Fact Sheet 17D: Exemption for Professional Employees Under the Fair Labor Standards Act
8
U.S. Department of Labor. Fact Sheet 17E: Exemption for Employees in Computer-Related Occupations Under the Fair Labor Standards Act
9
U.S. Department of Labor. Fact Sheet 17F: Exemption for Outside Sales Employees Under the Fair Labor Standards Act
10
NYC Business. Wage Regulations in New York State
11
U.S. Department of Labor. Overtime Pay
12
U.S. Department of Labor. Fact Sheet 56A: Overview of the Regular Rate of Pay Under the Fair Labor Standards Act
13
New York State Department of Labor. 12 NYCRR 142 – Miscellaneous Industries and Occupations
14
New York State Senate. New York State Labor Law Section 198
15
New York State Senate. New York Labor Law Section 198 – Costs, Remedies