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Many employers mistakenly believe that paying an employee a salary automatically means that they do not need to track the person鈥檚 hours worked. Employers are required to classify workers as exempt or nonexempt under the Fair Labor Standards Act (FLSA) and Oregon wage and hour laws, yet many are unfamiliar with the rules or unsure whether they are applying them correctly. Knowing these standards 鈥� and accurately classifying employees 鈥� is essential to staying compliant and avoiding legal complications.

Properly classifying an employee under the FLSA and Oregon law typically depends on a two-part test: 1, evaluating each job description or category individually using a 鈥渄uties test鈥� and 2, ensuring the employee is compensated on a salaried basis.

Duties test

The most used exemptions are the 鈥渨hite collar鈥� ones, which evaluate the duties of employees in executive, administrative, and professional roles:

1. Executive/supervisory: This exemption applies when an employee鈥檚 primary role is managing or supervising a team or department. Employees in this category typically exercise independent judgment, have authority to hire or fire (or their recommendations are given substantial weight), customarily supervise two or more full-time employees or their equivalent, operate with limited direct oversight, and make significant decisions that impact the business.
2. Administrative: Employees in this category handle office or other nonmanual administrative tasks that are directly connected to managing or operating the business, or supporting the administrative functions of a school system. They routinely exercise significant independent judgment and often serve in roles such as finance, marketing, or human resources managers.
3. Professional: This exemption applies to employees whose work requires consistent independent judgment and discretion, and whose duties are primarily intellectual and varied in nature 鈥� work that cannot be easily measured or standardized by output within a set period. These employees fall into one of three categories 鈥� learned professionals, creative professionals, or teachers.

Learned professionals are those whose primary duty requires advanced, specialized knowledge in a field of science or learning 鈥� knowledge typically gained through extensive, specialized education, such as a master鈥檚 or doctorate degree, rather than general schooling, apprenticeships, or routine on-the-job training.

Creative professionals do work that is original and creative in nature, performed within a recognized artistic field, and that relies primarily on the employee鈥檚 own invention, imagination, or talent.

Teachers are employees whose primary duty is teaching, tutoring, instructing, or lecturing 鈥� essentially, imparting knowledge 鈥� and who are employed and actively engaged in these activities within the school system or educational institution that employs them.

Salary basis

Exempt employees must meet at least one of the duties tests and generally be paid a predetermined salary on a salary basis. A salary is a fixed amount paid for a period of at least one week and does not include board or lodging. Under the FLSA, the minimum salary for exemption is $684 per week, or $35,568 annually, with up to 10 percent of this amount allowed from nondiscretionary bonuses, incentives, or commissions. Under Oregon law, an employee鈥檚 weekly salary must equal a monthly salary calculated by multiplying the applicable regional minimum wage by 2,080 hours and dividing by 12 months.

Notably, Washington鈥檚 minimum salary requirements are higher. The 2025 minimum salary requirement for employers with 1鈥�50 employees is $1,332.80 per week ($69,305.60 annually), and for employers with 51 or more employees, the number increases to $1,449.40 per week ($77,968.80 annually).

Being paid on a salary basis means the amount is generally not reduced based on the quality or quantity of work performed, so employees receive their full salary for any week in which they work, regardless of hours or days worked. Certain exceptions apply, such as when an employee is absent for one or more full days for personal reasons or for sickness or disability if the deduction is made pursuant to a bona fide plan or policy.

Remember, the default is that an employee is nonexempt unless the employer can establish that the employee meets both parts of the exemption test. Misclassifying employees can lead to unpaid overtime, minimum wage violations, and state or federal penalties. While it can be tempting to label employees as exempt for convenience 鈥� predictable pay and less time tracking 鈥� employers are still responsible for following wage and hour laws. Giving someone a management title or paying a salary does not automatically make them exempt; the employee鈥檚 duties and salary must meet the specific criteria for executive, administrative, or professional exemptions.

By taking the time to classify employees correctly, an employer will be in better position to avoid legal problems and ensure compliance with both federal and Oregon wage and hour laws. Such action protects the business and the people who work for it.

Abby Fitts is an attorney at Barran Liebman LLP. She advises employers regarding a full range of employment matters, including handbooks and policies. Contact her at 503-276-2190 or聽[email protected].

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91视频 guarantees the accuracy or completeness of any information published herein.