FLSA overtime exemption audit: is your office manager or dispatcher exempt?
A salary and a job title are not what makes an office manager or dispatcher exempt from overtime. Three separate tests decide it, and all three have to pass at once: the person has to be paid on a true salary basis, that salary has to clear a specific dollar threshold that varies by state, and their actual day-to-day duties have to match a legal category the DOL calls executive or administrative work. Fail any one of the three and overtime is owed for hours over 40 in a week, regardless of how strong the other two look. Field technicians are a different question, almost always answered "non-exempt" by a separate rule covered below; this page is about the people running the office and the dispatch board.
Federal threshold status on September 20, 2026. On May 14–15, 2026, DOL's Wage and Hour Division published a technical amendment formally restoring the 2019 salary thresholds for the executive, administrative and professional ("EAP" or "white collar") exemptions, after the 2024 rule that would have raised them was vacated by a federal court in November 2024 and the DOL dropped its appeal. The operative federal numbers are $684 a week ($35,568 a year) for the standard EAP exemptions and $107,432 a year for the highly compensated employee (HCE) test. Six states set their own, higher thresholds; see the table below. None of this changes the duties tests, which are unaffected by the salary litigation.
Who this is for
Owner-operators and office managers at HVAC, plumbing, electrical, landscaping and pest control businesses who pay a salary to office staff, dispatchers, or an operations or service manager, and want to know whether that salary alone is enough to stop paying overtime. It's written for roles that spend most of their time in the office or on the phone and dispatch board, not on the truck.
It is not for field technicians, installers or service techs who perform the trade itself. DOL regulations put manual, "blue collar" work outside these exemptions entirely, covered in what does not decide the question below — that group is virtually always non-exempt regardless of pay, and the classification question that actually applies to them (W-2 employee vs. 1099 contractor) is a different one, covered in the W-2 vs 1099 field technicians guide. If you're past classification and comparing what a role costs on paper, most of the inputs (payroll tax load, benefits) come from the subcontractor vs employee cost calculator. Prevailing wage and certified payroll on government jobs — a separate overtime-adjacent set of rules — are in the certified payroll and WH-347 guide.
Three tests, all required
Section 13(a)(1) of the FLSA (29 U.S.C. § 213(a)(1)) exempts bona fide executive, administrative and professional employees from minimum wage and overtime, defined and delimited by DOL regulations at 29 CFR Part 541. Unlike a worker-classification test that balances several factors against each other, this exemption is a checklist. Each element below has to be true on its own.
| Test | What it asks | Where it comes from |
|---|---|---|
| Salary basis | Is the employee paid a fixed amount each pay period, not reduced for variations in the quality or quantity of work, with only a short list of permitted deductions (full-day absences for personal reasons, certain disciplinary suspensions, unpaid FMLA leave, and similar narrow exceptions)? | 29 CFR § 541.602 |
| Salary level | Does that fixed salary meet or exceed the applicable dollar threshold — federal, or the higher state number if one applies? | 29 CFR § 541.600; state wage orders (see table below) |
| Primary duty | Is the employee's main job actually managing the business (executive) or running its general business operations with real discretion (administrative), rather than performing the trade or following a script? | 29 CFR §§ 541.100 (executive), 541.200 (administrative) |
There's a narrower fourth path, the highly compensated employee (HCE) test: an employee earning at least $107,432 a year in total compensation, with at least $684 a week paid on a salary basis, is exempt if they regularly perform just one of the executive, administrative or professional duties — a lower duties bar in exchange for a much higher salary bar. It rarely comes up for office and dispatch roles at a 2–25-technician shop, so this page's audit tool focuses on the standard test; the HCE path is worth knowing about if you have a well-paid operations lead.
Current salary thresholds
Six states set their own exempt-salary floor above the federal number, and five of them raised it again on January 1, 2026, most by tying it to the state minimum wage. Use whichever number is higher for the state where the employee actually does the work — not necessarily where your business is headquartered.
| Jurisdiction | Weekly minimum | Annualized | Notes |
|---|---|---|---|
| Federal (most states) | $684.00 | $35,568 | 2019 rule, restored by technical amendment May 2026 |
| California | $1,352.00 | $70,304 | 2× the state minimum wage; applies to all employers regardless of size |
| Washington | $1,541.70 | $80,168.40 | 2.25× the state minimum wage; the highest in the country |
| Colorado | $1,111.23 | $57,784 | Set annually by the Colorado Overtime & Minimum Pay Standards Order |
| New York — NYC, Nassau, Suffolk, Westchester | $1,275.00 | $66,300 | Higher downstate rate; follows the work site |
| New York — rest of state | $1,199.10 | $62,353.20 | Lower upstate rate; still above federal |
| Maine | $871.16 | $45,300.32 | Published on a fixed annual schedule |
| Alaska | $1,120.00 | $58,240 | 2× the state minimum wage; rose from $1,040/week on July 1, 2026 |
Up to 10% of the standard federal threshold can be satisfied through nondiscretionary bonuses, incentive pay or commissions, provided they are paid at least annually — DOL Fact Sheet 17A. Confirm whether your state allows the same before relying on it; several do not.
The duties tests for office and dispatch roles
Meeting the salary tests gets you nowhere if the job itself doesn't match. Two categories cover almost every office and dispatch role at a trade business; the professional exemption (accountants, engineers, and similar credentialed roles requiring prolonged specialized instruction) comes up occasionally for a controller or a licensed CPA doing your books, rarely for anyone else.
| Category | Required elements (all must be true) | Typical trade-business role |
|---|---|---|
| Executive 29 CFR 541.100 | Primary duty is managing the business or a recognized department; customarily and regularly directs the work of two or more full-time employees (or the equivalent); has authority to hire, fire, promote or discipline, or their recommendations on those decisions carry real weight. | An office or service manager who runs the office staff and dispatch team and has real input on who gets hired or let go. |
| Administrative 29 CFR 541.200 | Primary duty is office or non-manual work directly related to the management or general business operations of the company (finance, HR, marketing, compliance, purchasing, scheduling policy) rather than producing the service the company sells; regularly exercises discretion and independent judgment on matters of significance. | An operations coordinator who sets scheduling policy, negotiates with vendors, and decides how jobs get routed, rather than one who follows a fixed script. |
A head dispatcher can land in either category depending on what the job actually is: DOL guidance names "head dispatcher" as an example administrative role, but only where the person exercises real discretion over routing, staffing and vendor decisions — not where they're following a fixed rotation or a supervisor's script for every call. The dispatcher who just answers the phone and assigns the next job off a rotation, with no independent judgment involved, does not meet either duties test no matter what the org chart calls them.
Three roles, factor by factor
These are illustrative scenarios, not case law. They show how the same tests read on different fact patterns.
A. The scripted dispatcher
Paid $52,000 a year, salaried. Answers the phone, assigns the next job off a rotation board, and follows a checklist for what to tell customers. No one reporting to them, no hiring input, no pricing or scheduling-policy decisions.
Reading: salary basis and salary level both pass, but the primary duty is routine, scripted work with no independent judgment on matters of significance. Neither the executive nor the administrative test is met. This role is non-exempt regardless of the $52,000 salary.
B. The office/service manager
Paid $68,000 a year, salaried. Runs the front office and the three-person dispatch team, sets who works which shift, has been the deciding voice on the last two hires, and manages the vendor account for parts and fuel cards.
Reading: salary basis and level pass in most states (check the state table above); primary duty is management of a recognized unit, directs 2+ employees, and has real hiring authority. This is a plausible executive exemption, assuming the state threshold is also cleared.
C. The hybrid operations coordinator
Paid $46,000 a year, salaried. Handles scheduling and customer escalations with real discretion over how jobs get routed and prioritized, but supervises no one and has no hiring input.
Reading: the executive test fails on the supervision element. The administrative test is the one to evaluate carefully — does the role really exercise independent judgment on matters of significance, or mostly execute a process someone else designed? If it's the latter, non-exempt. If it's the former and the salary clears the state threshold, it's a closer administrative-exemption case worth documenting carefully.
What does not decide the question
- The job title. DOL regulations state directly that a title such as "manager" or "supervisor" has no bearing on exempt status — 29 CFR § 541.2. The actual duties decide it.
- Being salaried, on its own. Salary basis is one of three required elements, not a substitute for the other two.
- Doing the trade personally. 29 CFR § 541.3(a) puts manual, "blue collar" workers entirely outside these exemptions and specifically names electricians, plumbers, mechanics and construction workers as examples, "no matter how highly paid they might be." A field technician who also does some scheduling for the crew doesn't become exempt by picking up office tasks unless management is genuinely their primary duty.
- A modest amount of manual or field work by an otherwise-exempt manager. An office manager who occasionally rides along on a job doesn't lose the exemption for that alone, but a pattern of spending most of the week doing hands-on trade work instead of managing cuts against it — primary duty is judged by what the job actually is, not the best week.
- A promise of "comp time" instead of overtime pay. Private employers generally cannot substitute paid time off for cash overtime under the FLSA; that trade only exists for public-sector employers under a specific statutory provision.
Audit: is this role exempt?
Answer for one role at a time, based on what the job actually involves day to day, not the title on the org chart. Each of the three tests is evaluated on its own — this is a checklist, not a score. Nothing you enter leaves your browser. The result is an educational aid, not a classification determination.
Educational estimate only. This is not legal, tax or financial advice, and it is not a determination by DOL or any court. Confirm with an employment attorney before you rely on it.
What non-exempt back pay can cost
A misclassified office employee is exposed on three numbers at once, and they stack.
- The overtime itself. One and a half times the regular rate for every hour over 40 in a workweek (29 U.S.C. § 207). The "regular rate" isn't just the base hourly-equivalent rate — it generally has to include nondiscretionary bonuses and other required payments, which raises the overtime rate above what a simple hourly conversion would suggest (29 CFR Part 778).
- The look-back period. Two years under 29 U.S.C. § 255(a), or three if the violation was willful — meaning you knew, or recklessly disregarded whether, the classification was wrong.
- Liquidated damages. An amount equal to the unpaid overtime can be added on top under 29 U.S.C. § 216(b). As of Field Assistance Bulletin 2025-3 (June 27, 2025), DOL's Wage and Hour Division no longer pursues liquidated damages in pre-litigation investigations or settlements — it limits those resolutions to unpaid wages and overtime — but a court, or an employee suing directly, can still award them.
State law can add its own layer on top of the federal exposure — some states extend the look-back period further or add their own penalties — so check your state labor agency alongside the federal numbers above.
If you have already treated a role as exempt
- Run the audit above for the specific role, honestly. Document the actual facts, not the aspirational job description.
- If it fails, reclassify going forward. Start tracking hours and paying overtime from a date you choose. This stops new liability from accruing; it doesn't erase what's already owed.
- Address the back pay. Calculate what's owed for the applicable look-back period and pay it, ideally with a paper trail showing the correction was voluntary and prompt — that record matters if willfulness is ever disputed.
- Consider DOL's PAID program. The Payroll Audit Independent Determination program, relaunched by DOL's Wage and Hour Division on July 24, 2025 after being discontinued in 2021, lets an employer self-audit, report likely FLSA violations to DOL, and resolve them with supervised back-wage payments. It isn't available if you're already under investigation or facing a claim, and an employee can still decline the payment and pursue their own claim.
- Get advice on the duties question specifically. The salary tests are arithmetic; the duties tests are judgment calls where reasonable people (and reasonable DOL investigators) can land differently. That's exactly where an employment attorney earns their fee.
Methodology and sources
This guide is built from the primary documents below, read on September 20, 2026, plus secondary sources (mainly law-firm client alerts) where noted, since the underlying DOL and Federal Register pages summarize but don't always restate every dollar figure in one place. Statutory citations (29 U.S.C., 29 CFR) are to the sections named.
| Source | Used for | Type | Checked |
|---|---|---|---|
| Federal Register, Docket WHD-2026-0100, RIN 1235-AA57 (technical amendment, published May 15, 2026) | Restoration of the 2019 salary thresholds after the 2024 rule was vacated; $684/week and $107,432 HCE figures; effective date | Primary | September 20, 2026 |
| DOL Fact Sheet 17A: Exemption for executive, administrative, professional, computer and outside sales employees | Salary basis, salary level, duties test structure; 10% nondiscretionary bonus allowance; HCE test description | Primary | September 20, 2026 |
| eCFR, 29 CFR Part 541 (§§ 541.2, 541.3, 541.100, 541.200, 541.602) | Job-title-insufficiency rule; blue-collar/manual-labor exclusion and named trade examples; executive and administrative duties elements; salary basis deduction rules | Primary | September 20, 2026 |
| DOL news release and Field Assistance Bulletin 2025-3 (June 27, 2025) | End of liquidated damages in pre-litigation WHD investigations and settlements | Primary | September 20, 2026 |
| DOL PAID program relaunch coverage, July 24–28, 2025 (Tucker Ellis, Fisher Phillips, LexBlog client alerts) | Relaunch date, self-audit and reporting steps, program limitations | Secondary | September 20, 2026 |
| State salary-threshold roundups for 2026 (Kullman Law Firm; Symmetry Software; Overtime-FLSA.com), cross-checked against each other | California, Washington, Colorado, New York (both regions), Maine and Alaska 2026 exempt-salary figures | Secondary | September 20, 2026 |
What we could not fully verify
- The exact upstate New York annualized figure. Sources publish the weekly rate ($1,199.10) consistently but round the annualized figure differently ($62,353.20 vs. a rounded $62,400). We show the calculated figure; confirm against the current New York wage order for your region.
- Whether every state's 10% nondiscretionary-bonus allowance mirrors the federal one. Several of the six higher-threshold states do not allow it, or allow it only partially; confirm with your state labor agency before counting a bonus toward the threshold.
- City-level thresholds. A handful of cities (reported in secondary sources, not verified here) set their own exempt-salary floors above their state's number. If you operate in a major metro, check local ordinances separately.
Where a primary source and a secondary source conflict, the primary source wins. If you find an error, tell us through the about page and we will re-verify.
Frequently asked questions
Does putting an employee on salary automatically mean I don't owe overtime?
No. Being salaried only satisfies the salary basis test. The employee's salary also has to meet the applicable dollar threshold, and their actual job duties have to match the executive, administrative or professional test. All three requirements are required together. Miss any one of them and the employee is non-exempt no matter how the paycheck is structured.
Do field technicians ever qualify for this exemption?
Almost never. DOL regulations at 29 CFR 541.3(a) specifically exclude manual and "blue collar" workers from the executive, administrative and professional exemptions, and name electricians, plumbers, mechanics and construction workers as examples, regardless of how highly paid they are. A technician who personally performs the trade is covered by minimum wage and overtime law even if you call them a manager. This page covers office and dispatch roles; field technician pay structure and classification are covered in the W-2 vs 1099 guide.
Which state's salary threshold applies if our office manager works from home in a different state?
Generally the threshold of the state where the work is actually performed, not the state where your business is headquartered. If that employee's home state is one of the six with a higher threshold than the federal $684 a week, that higher number is what you have to meet, on top of the federal duties test.
Our dispatcher answers calls and texts after hours from home. Does that matter?
It matters most for a non-exempt dispatcher, where those minutes are compensable work time that counts toward the 40-hour overtime threshold, even in small increments. For an employee who otherwise passes all three exemption tests, occasional after-hours availability does not by itself break the exemption, but a pattern of hands-on, non-discretionary work outside scheduled hours is evidence about what the job actually is, not just what the org chart says.
Can I pay a fixed weekly salary that's meant to already cover some overtime?
Not by default. A salary alone does not cover overtime for a non-exempt employee; if the role fails the exemption tests, overtime is still owed separately for hours over 40, calculated on the regular rate derived from that salary. There are narrow, technical pay structures (such as the fluctuating workweek method) that can build overtime into a fixed payment, but they have specific requirements and are easy to get wrong. Get advice before relying on one.
If I find a misclassified office employee, will the DOL hit me with double damages?
Not automatically, and not before litigation. Under Field Assistance Bulletin 2025-3 (June 27, 2025), DOL's Wage and Hour Division stopped seeking liquidated damages — the extra amount equal to back pay — in pre-litigation investigations and settlements; it now limits those resolutions to unpaid wages and overtime. Liquidated damages are still available to a court, or to an employee who sues directly under 29 U.S.C. § 216(b), so the safest move is still to fix the pay going forward and address the back pay promptly.
How far back does overtime back pay liability go?
Two years under 29 U.S.C. § 255(a), or three years if the violation was willful. Willfulness generally turns on whether you knew, or showed reckless disregard for whether, the classification violated the FLSA — which is one more reason a documented, good-faith audit like this one is worth doing before a complaint or an investigation forces the question.