One of the most common payroll misunderstandings: salaried means no overtime. That’s wrong — and it can be an expensive mistake. Here’s how overtime actually works for salaried employees in Massachusetts.
The Short Answer
Salaried employees can be exempt from overtime (meaning no overtime pay required) OR non-exempt (overtime required). The salary itself doesn’t determine exempt status — it’s a combination of salary level, salary basis, and job duties.
Federal vs. Massachusetts Law
Massachusetts follows the federal Fair Labor Standards Act (FLSA) for overtime exemptions. The state overtime law doesn’t add significant additional protections for salaried workers beyond FLSA.
Overtime rate: 1.5× the regular rate for all hours over 40 in a workweek.
The Three Requirements for Exempt Status
To be exempt from overtime, a salaried employee must meet all three tests:
1. Salary Level Test
The employee must earn at least $684/week ($35,568/year) — the current federal threshold.
Highly Compensated Employee (HCE) exemption: Employees earning $107,432+/year qualify for a simplified duties test.
If the employee earns less than $684/week, they cannot be exempt regardless of their job duties.
2. Salary Basis Test
The employee must receive a predetermined, fixed salary that isn’t reduced based on the quality or quantity of work. If you dock a manager’s pay because they missed a day, they may lose their exempt status.
Permitted deductions (don’t destroy exempt status):
- Full-day absences for personal reasons (when the employee has no PTO left)
- Full-day absences for sickness (if you have a bona fide sick leave policy)
- Penalties for violating safety rules
- Full-week suspension for workplace conduct violations
- Partial week worked in first/last week of employment
Impermissible deductions:
- Partial-day deductions (clock in late, leave early)
- Deductions for lack of work (slow week)
- Reducing salary because of a bad performance period
3. Duties Test
This is where it gets detailed. There are several exemption categories:
Executive Exemption
- Primary duty: managing the enterprise or a department/subdivision
- Customarily directs the work of at least two full-time employees
- Has authority to hire/fire or whose recommendations on hiring/firing are given particular weight
Administrative Exemption
- Primary duty: office/non-manual work related to management or general business operations
- Includes the exercise of discretion and independent judgment with respect to significant matters
This is the most litigated exemption. “Discretion and independent judgment” means more than just following instructions or procedures. The employee must have real authority to make consequential decisions.
Professional Exemption Two types:
- Learned professional: primary duty requires advanced knowledge in a field of science or learning, customarily acquired by a prolonged course of specialized intellectual instruction (doctors, lawyers, engineers, accountants, teachers)
- Creative professional: primary duty requires invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor
Computer Employee Exemption Applies to certain IT workers earning $684+/week or $27.63+/hour:
- Systems analyst, programmer, software engineer, or similar
- Primary duty involves application of systems analysis techniques; design, development, documentation, analysis, testing of computer systems/programs; or operating/testing a computer system
Outside Sales Exemption No salary requirement. Employee’s primary duty is making sales or obtaining orders/contracts while customarily and regularly engaged away from the employer’s place of business.
Note: Inside sales employees are generally not exempt under the outside sales exemption.
Common Salaried-But-Not-Exempt Situations
These employees are often misclassified:
- Assistant managers who mostly perform the same tasks as hourly workers and rarely exercise real supervisory authority
- Administrative assistants whose job is primarily clerical, not discretionary
- Paralegals (generally not exempt — lawyers are, paralegals typically aren’t)
- Financial analysts at the lower levels performing routine data entry or analysis following strict formulas
- Help desk technicians (computer exemption requires more than routine support)
Calculating Overtime for Non-Exempt Salaried Employees
If a salaried employee is non-exempt, overtime is calculated differently than you might expect.
Method 1: Fixed Workweek (most common)
If the salary covers a fixed number of hours per week:
Regular rate = Weekly salary ÷ Expected hours
Overtime premium = Regular rate × 0.5
Example: Employee earns $800/week for a 40-hour schedule.
- Regular rate: $800 ÷ 40 = $20/hr
- Works 48 hours in a week
- Regular pay: $800 (already paid via salary)
- Overtime premium: 8 hrs × $20 × 0.5 = $80
- Total: $880
Method 2: Fluctuating Workweek
If the salary is intended to cover all hours worked (rare — requires a written agreement):
Regular rate = Weekly salary ÷ Actual hours worked
Overtime premium = Regular rate × 0.5
Example: Same $800 salary, works 48 hours.
- Regular rate: $800 ÷ 48 = $16.67/hr
- Overtime premium: 8 hrs × $16.67 × 0.5 = $66.67
- Total: $866.67
The fluctuating workweek method results in lower overtime costs for employers but must be set up correctly with advance notice to the employee.
Massachusetts-Specific Notes
Sunday premium pay: Massachusetts has its own Sunday pay requirements for retail businesses (though the premium has been phased down). This is separate from FLSA overtime and applies to some hourly workers regardless of hours.
Blue Laws: Massachusetts has laws restricting certain work on Sundays and holidays. Employees who work on holidays may be entitled to premium pay under their employer’s policy or union contract — but there’s no general Massachusetts law requiring holiday premium pay for most private employers.
Domestic service workers: Massachusetts has separate rules for home care and domestic workers that differ from FLSA.
Misclassification Penalties
Getting this wrong is expensive. FLSA violations can result in:
- Back pay for all unpaid overtime (up to 3 years)
- Liquidated damages (equal to the back pay owed)
- Attorney’s fees
- Civil penalties
Massachusetts also enforces wage theft laws with significant penalties for willful violations.
Practical Checklist Before Treating a Salaried Employee as Exempt
- ✓ Does the employee earn at least $684/week?
- ✓ Is the employee paid on a salary basis (no improper deductions)?
- ✓ Does the employee’s primary duty meet one of the exemption tests?
- ✓ Have you documented the duties analysis?
If you can’t confidently answer yes to all four, the employee likely should be treated as non-exempt.
The OtterDesk payroll calculator calculates overtime pay for both hourly and non-exempt salaried employees — enter the weekly salary and hours worked and it handles the math.