The Alabama Employer’s Definitive Guide to Salaried Employees: Navigating the FLSA in a Federal-Only State

Part I: The Foundation – Understanding the Alabama Landscape

Section 1: The Alabama Anomaly: Why Federal Law is State Law

For employers operating in the state of Alabama, the landscape of wage and hour law is uniquely streamlined, yet fraught with potential peril.

Unlike the vast majority of states, Alabama has not enacted its own comprehensive laws governing critical aspects of employee compensation such as a state-specific minimum wage, overtime pay requirements, or mandated meal and rest breaks.¹

The state legislature has also refrained from setting rules around the frequency of paydays or the content of paystubs.⁴

This legislative approach means that for nearly all wage and hour matters, Alabama employers must look to a single source of authority: the federal Fair Labor Standards Act (FLSA).⁶

This reliance on a single federal statute creates a distinct legal environment.

On one hand, it appears to simplify compliance; employers are spared the complex task of navigating and reconciling separate, and often more stringent, state and federal regulations, a challenge faced by their counterparts in states like California or New York.⁹

There is only one set of rules to master.

However, this simplicity is deceptive and masks a higher-risk reality.

In states with their own labor laws, a state-level Department of Labor often serves as the initial forum for disputes, providing localized guidance and sometimes acting as a buffer for minor, unintentional infractions.

In Alabama, the absence of this state-level apparatus means that any wage and hour claim is, by its very nature, a federal issue.⁶

Disputes are adjudicated directly by the U.S. Department of Labor (DOL) or litigated in federal court, venues where the procedural complexity, potential for class-action lawsuits, and financial stakes are significantly elevated.¹⁰

This framework makes a deep, functional understanding of the FLSA not merely a matter of best practice for Alabama businesses, but an absolute necessity for survival and risk management.

Every decision regarding employee pay is made under the direct and unforgiving purview of federal law.

Section 2: The Great Divide: A Narrative Introduction to Exempt vs. Non-Exempt Status

At the heart of the Fair Labor Standards Act lies a fundamental classification that every Alabama employer must master: the distinction between “exempt” and “non-exempt” employees.

This is the great divide in wage and hour law, and it is the single most critical, and most frequently misunderstood, classification decision an employer will make.

Getting it wrong can lead to staggering financial liabilities.¹²

A common and dangerous misconception is that paying an employee a “salary” automatically makes them exempt from overtime.

This is incorrect.

“Salaried” is merely a method of payment, not a legal status.¹⁴

The true legal status—exempt or non-exempt—is what determines whether an employee is entitled to the FLSA’s protections, most notably overtime pay for hours worked in excess of 40 in a workweek.¹⁴

To clarify this crucial concept, it is helpful to think of a company’s workforce structure as a building with two different security clearance levels.

Non-Exempt Employees are like staff who are issued a standard keycard.

This keycard tracks their every entry and exit, precisely recording all hours they are “on the clock.” The system is designed for accountability and fairness; when the time log shows more than 40 hours in a week, the system automatically grants them “premium access”—overtime pay, calculated at one and a half times their regular rate.¹⁴

The employer is required by law to meticulously track these hours and pay the premium for extra time worked.⁴

Exempt Employees, in contrast, are like senior personnel entrusted with a master key.

They have access to the entire building at any time, day or night, because their value to the organization is not measured by the minutes they spend on-site, but by the successful execution of their core responsibilities.¹⁷

Their compensation is a fixed salary, reflecting the trust and significance of their role, regardless of whether they work 35 hours one week or 55 the next.

They are “exempt” from the time-tracking and overtime-pay system because the nature of their work is fundamentally different.¹⁴

The legal and financial risk for an Alabama employer arises when they give an employee a master key (exempt status) when the law unequivocally states that employee should only have a standard, time-tracking keycard (non-exempt status).

The remainder of this guide is dedicated to helping employers understand precisely how the law defines who gets which key.

Part II: The Three Gates of Exemption – A Comprehensive Analysis

For an employee to be properly classified as exempt from overtime, they must pass through three distinct legal “gates.” These are not optional criteria or guidelines; they are mandatory tests, and failure to satisfy even one of them means the employee is, by law, non-exempt and eligible for overtime, regardless of their job title or whether they are paid a salary.¹³

The three gates are: the Salary Basis Test, the Salary Level Test, and the Duties Test.

Section 3: The First Gate – The Salary Basis Test

The first gate an employee must pass to qualify for exemption is the Salary Basis Test.

This test examines how an employee is paid, ensuring their compensation structure is consistent with the nature of exempt work.

To pass this test, an employee must regularly receive a “predetermined amount” of compensation each pay period on a weekly or less frequent basis.¹⁴

Crucially, this amount cannot be subject to reduction because of variations in the quality or, most importantly, the

quantity of the work performed.⁷

This is often referred to as the “no-docking” rule.

As a general principle, an exempt employee must receive their full salary for any week in which they perform any work, no matter how little.²⁴

If an exempt employee works for one hour on Monday and is then out sick for the rest of the week, they are generally entitled to their full weekly salary.

This rule is a primary tripwire for many employers because it runs counter to the intuitive logic of paying for time worked.

A frontline manager, accustomed to the rules for hourly employees, might naturally assume that if a salaried employee leaves two hours early for a personal appointment, their pay should be docked for the time missed.

This seemingly logical action is, in fact, a significant FLSA violation that can have cascading consequences.⁷

A single improper deduction for a partial-day absence can jeopardize the employee’s exempt status, potentially converting them to a non-exempt employee and triggering retroactive overtime liability.²⁵

The risk extends even further.

If an employer has an “actual practice” of making such improper deductions, the DOL may determine that the exemption is lost not just for the single employee, but for all employees in the same job classification working for the same managers responsible for the deductions.²⁵

This means one manager’s misunderstanding of the rules could create a massive, unfunded liability for overtime across an entire department.

This operational vulnerability highlights that FLSA compliance is not just an HR function; it requires rigorous training for all managers who oversee exempt staff to ensure they understand these unique and counter-intuitive pay rules.

While the rule against docking pay is strict, the FLSA does permit some deductions from an exempt employee’s salary without violating the Salary Basis Test.

These are specific, narrow exceptions:

• For full-day absences for personal reasons, other than sickness or disability.
• For full-day absences due to sickness or disability, but only if the deduction is made in accordance with a bona fide plan, policy, or practice of providing compensation for loss of salary (e.g., a paid sick leave or disability insurance plan).⁷
• To offset amounts an employee receives as jury or witness fees, or for temporary military pay.
• For penalties imposed in good faith for infractions of safety rules of major significance.
• For unpaid disciplinary suspensions of one or more full days for infractions of workplace conduct rules.²⁵
• In the first or last week of employment, an employer can pay a proportionate part of the full salary for the time actually worked.

Any deduction outside of these specific circumstances, especially for partial-day absences, is impermissible and places the employer at significant legal risk.²⁵

Section 4: The Second Gate – The Salary Level Test in a Legal Crossfire

The second gate to exemption is the Salary Level Test, which requires that an employee be paid a salary meeting a certain minimum threshold set by the Department of Labor.

This test has recently become a focal point of intense legal and political conflict, creating a confusing and volatile environment for employers.

To navigate this, it is essential to understand the chronological development of the rules and their current legal status.

1. The Current, Enforceable Standard (2019 Rule)

As of this writing, the legally binding and enforceable minimum salary threshold is the one established by the DOL’s 2019 final rule.

To qualify for the executive, administrative, or professional exemptions, an employee must be paid a salary of at least $684 per week, which is equivalent to $35,568 per year.18 For the “highly compensated employee” (HCE) exemption, the total annual compensation must be at least

$107,432.²⁶

This is the standard that the DOL is currently enforcing and the one Alabama employers must adhere to for compliance.²⁶

2. The DOL’s 2024 Final Rule (The Proposed Increase)

In April 2024, the DOL published a new final rule intended to dramatically increase these salary thresholds.

The rule was designed to be implemented in two stages:

• Stage 1 (July 1, 2024): The standard salary level was set to increase to $844 per week (equivalent to $43,888 annually).
• Stage 2 (January 1, 2025): The standard salary level was set to increase again to $1,128 per week (equivalent to $58,656 annually).²⁶
  
  The rule also included similar steep increases for the HCE threshold and a mechanism for automatic updates every three years.26

3. The Court Injunction (The Current Legal Reality)

Before the July 1, 2024, increase could take effect, business groups and the State of Texas filed a lawsuit challenging the new rule.

A federal court in Texas subsequently issued a nationwide injunction, blocking the 2024 rule from being implemented.28 As a result of this court order, the planned increases are on hold, and the salary thresholds have reverted to the 2019 levels ($684 per week).

This legal battle is ongoing, but for now, the 2024 rule is not in effect.

4. Strategic Guidance for Employers

This legal back-and-forth has created a significant “morale and budget trap.” Many prudent employers, anticipating the July 1 deadline, had already identified affected employees and made plans to either raise their salaries to the new $43,888 threshold or reclassify them as non-exempt.33 Those who communicated or implemented these pay raises now face a difficult choice.

Rolling back the raises after the court injunction would be a devastating blow to employee morale and could be perceived as a breach of good faith.

However, maintaining the higher, non-required salaries means committing to a significant and potentially unbudgeted payroll expense.

This situation demonstrates that compliance in a volatile regulatory environment is not just about following the final rule, but about strategically managing the risks created by the rule-making and litigation process itself.

Employers must now make difficult decisions about compensation philosophy and budget allocation, regardless of the final legal outcome.

The table below provides a clear snapshot of this legal uncertainty.

Earnings Threshold	Currently Enforceable Level (2019 Rule)	Proposed Level – July 1, 2024 (Blocked by Court)	Proposed Level – Jan 1, 2025 (Blocked by Court)
Standard Salary Level	$684 per week ($35,568 annually)	$844 per week ($43,888 annually)	$1,128 per week ($58,656 annually)
Highly Compensated Employee (HCE) Total Annual Compensation	$107,432 per year	$132,964 per year	$151,164 per year
Data derived from.26

Section 5: The Third Gate – The Duties Test: Beyond the Job Title

Passing the Salary Basis and Salary Level tests is not enough.

The third and final gate—the Duties Test—is often the most complex and subjective part of the exemption analysis.

This test shifts the focus from how much an employee is paid to what they actually do day-to-day.¹⁷

The FLSA is unequivocal on one point: an employee’s job title is legally irrelevant in determining their exempt status.¹⁴

Calling an employee a “manager,” “administrator,” or “professional” means nothing if their actual job responsibilities do not align with the specific criteria defined in the regulations.¹⁵

The analysis must be based on a granular assessment of the employee’s real-world tasks and responsibilities.²⁰

Central to this analysis is the concept of the employee’s “primary duty.” The DOL defines this as the “principal, main, major or most important duty that the employee performs”.³⁶

Determining the primary duty requires a holistic look at the job, with the major emphasis on the character of the work as a whole.³⁶

While there is a general rule of thumb that an employee who spends more than 50 percent of their time performing exempt work will satisfy the primary duty requirement, this is not a rigid, mathematical formula.

An employee could spend less than half their time on exempt duties and still meet the test if other factors—such as their relative importance to the business and their freedom from direct supervision—support that conclusion.²²

This final gate is the gateway to the specific “white-collar” exemptions, each with its own detailed duties test.

Part III: A Deep Dive into the “White-Collar” Duties Tests

To successfully navigate the Duties Test, employers must understand the specific requirements for each of the major “white-collar” exemptions: Executive, Administrative, Professional, Computer, and Outside Sales.

The following table provides a high-level comparison to frame the detailed analysis in the sections that follow.

Exemption Category	Primary Duty Focus	Key Requirement(s)	Common Mistake
Executive	Managing people and the enterprise	Directs work of 2+ FTEs; has hire/fire influence	Giving a “manager” title to a lead worker who primarily performs non-exempt tasks.
Administrative	Managing business operations	Office/non-manual work related to business operations; exercises discretion on matters of significance	Confusing the exemption with clerical or “administrative assistant” roles.
Learned Professional	Application of advanced knowledge	Work requires knowledge from a prolonged course of specialized intellectual instruction (e.g., advanced degree)	Assuming experience can substitute for the required formal education.
Creative Professional	Originality and talent	Work requires invention, imagination, or talent in an artistic field	Applying it to roles that are more technical or routine than truly creative.
Computer	High-level computer/IT functions	Systems analysis, programming, software engineering	Applying it to help-desk or basic IT support roles.
Data derived from.15

Section 6: The Executive Exemption: The True Manager

The Executive Exemption is designed for employees whose primary role is management.

It is not intended for supervisors in name only or for employees who are primarily “working foremen”.¹⁵

To qualify for this exemption, an employee must meet all of the following criteria, in addition to the salary tests:

1. Primary Duty of Management: The employee’s principal duty must be managing the enterprise or a customarily recognized department or subdivision of the enterprise.²⁷ This includes activities such as planning and controlling budgets, directing and coordinating business operations, and setting policies.
2. Direction of Employees: The employee must customarily and regularly direct the work of at least two or more other full-time employees (or their equivalent).²⁰ For example, a manager who supervises two full-time employees, or one full-time and two half-time employees, would meet this requirement.³⁸
3. Authority to Hire and Fire: The employee must have the authority to hire or fire other employees. If they do not have the ultimate authority, their suggestions and recommendations as to hiring, firing, advancement, promotion, or any other change of status for other employees must be given “particular weight” by superiors.²⁴

A frequent misapplication of this exemption occurs in retail and service environments.

An employer might give a “lead cashier” or “shift supervisor” a manager title and a salary.

However, if that employee spends 80% of their time operating a cash register, stocking shelves, and performing the same tasks as the employees they supposedly manage, their primary duty is not management.

They are likely a non-exempt employee entitled to overtime, because their managerial tasks are secondary to their primary role as a service worker.¹⁵

The title is irrelevant; the reality of the work is what matters.

Section 7: The Administrative Exemption: The Business Operator

The Administrative Exemption is arguably the most nuanced, most frequently misunderstood, and most litigated of the white-collar exemptions.

A common error is to equate “administrative” work with the duties of an administrative assistant or routine clerical tasks; in reality, the exemption is intended for something quite different.²⁴

It applies to relatively high-level employees whose work is essential to the running of the business itself, rather than producing the goods or services the business sells.²⁴

To qualify, an employee must meet two critical duties criteria:

1. Work Related to Management or General Business Operations: The employee’s primary duty must consist of performing office or non-manual work that is directly related to the management or general business operations of the employer or the employer’s customers.²⁷ The regulations distinguish this from “working on a manufacturing production line or selling a product in a retail or service establishment”.³⁶ This exempt work services the business itself. Examples of qualifying functional areas include tax, finance, accounting, budgeting, auditing, insurance, quality control, purchasing, human resources, marketing, and safety and health.³⁶
2. Discretion and Independent Judgment: The employee’s primary duty must include the exercise of “discretion and independent judgment with respect to matters of significance”.²⁷ This is the core of the exemption and a high standard to meet. It requires more than simply applying well-established techniques, procedures, or standards described in manuals.³⁶ It implies the authority to compare and evaluate possible courses of conduct and to make a decision or recommendation after considering the various possibilities, often free from immediate direction or supervision.³⁶ The fact that an employee’s decisions may be reviewed or even reversed by a superior does not automatically disqualify them, but they must have the authority to make an independent choice in the first place.³⁶

The key to correctly applying this exemption lies in analyzing the employee’s function within the business ecosystem.

Is the employee engaged in the “production” work of the business, or are they performing work that supports the business’s operational framework? For example, in a software company, a coder who writes the product’s code is a production employee (and may or may not be exempt under the Computer or Professional exemptions).

The Human Resources Generalist who manages benefits, recruiting, and employee relations for the company is performing work directly related to the general business operations.

If that HR Generalist also has the authority to interpret policy and make significant decisions about employee matters, they likely qualify for the Administrative Exemption.

A payroll clerk who simply enters data according to established rules, with no room for independent judgment on significant matters, would not qualify, even though their work is in an “administrative” department.²⁴

Section 8: The Professional Exemption: The Learned and the Creative

The Professional Exemption covers two distinct types of employees: those whose work is based on advanced academic knowledge (Learned Professionals) and those whose work is based on artistic talent (Creative Professionals).

1. The Learned Professional

This exemption is for jobs that are in a “field of science or learning” and require knowledge of an advanced type “customarily acquired by a prolonged course of specialized intellectual instruction”.27 This language points directly to professions that have a standard prerequisite of an advanced, specialized academic degree.35

The three key elements of the test are:

• The work must require advanced knowledge.
• The advanced knowledge must be in a field of science or learning.
• This knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

This exemption explicitly excludes occupations where skills are primarily acquired through apprenticeships or on-the-job training.³⁵

Classic examples of Learned Professionals who generally meet the duties test include doctors, lawyers, registered nurses (but not licensed practical nurses), certified public accountants (but not bookkeepers), engineers, and architects.³⁵

The determination is based on the standard requirements for the profession, not necessarily the credentials of the individual employee, although the two usually align.

2. The Creative Professional

This exemption is for employees whose primary duty is the performance of work requiring “invention, imagination, originality or talent in a recognized field of artistic or creative endeavor”.27 This is a judgment-based test that depends on the extent of the invention, imagination, and talent required by the job.

Recognized artistic fields include music, writing, acting, and the graphic arts.

The exemption applies to musicians, composers, conductors, novelists, and actors.

It can also apply to certain journalists who do more than just report facts, such as those who conduct investigative interviews, analyze or interpret public events, or write editorials or opinion columns that require originality and talent.²⁷

It does not apply to employees who perform work that is more routine and less dependent on invention or talent.

Section 9: Other Key Exemptions: Computer & Outside Sales

Beyond the three main white-collar categories, two other exemptions are highly relevant for many Alabama businesses: the Computer Professional Exemption and the Outside Sales Exemption.

1. The Computer Professional Exemption

This exemption is tailored for certain skilled computer employees.

To qualify, the employee’s primary duty must consist of:

• The application of systems analysis techniques and procedures to determine hardware, software, or system specifications; OR
• The design, development, documentation, analysis, creation, testing, or modification of computer systems or programs based on user or system design specifications; OR
• The design, documentation, testing, creation, or modification of computer programs related to machine operating systems.²⁰

This exemption is intended for high-level roles like computer systems analysts, computer programmers, and software engineers.²⁰

It generally does not apply to employees engaged in the manufacture or repair of computer hardware, nor does it cover help-desk staff who provide support by following pre-determined instructions.

Uniquely, this exemption offers two compensation options.

The employee can be paid on a salary basis of at least $684 per week, or they can be paid on an hourly basis at a rate of not less than $27.63 per hour.²²

2. The Outside Sales Exemption

This exemption has two straightforward duties requirements:

• The employee’s primary duty must be making sales (as defined in the FLSA) or obtaining orders or contracts for services or for the use of facilities.²⁷
• The employee must be “customarily and regularly engaged away from the employer’s place or places of business” in performing that primary duty.²⁰

The most critical feature of the Outside Sales Exemption is that it has no salary basis or salary level requirement.¹³

An employee who meets the duties test can be exempt regardless of how much or in what manner they are paid.

A common and costly mistake is to apply this exemption to “inside sales” employees who conduct their sales activities primarily from the employer’s office via phone, email, or the internet.

These employees do not meet the “outside” requirement and are therefore non-exempt, unless they qualify under a different exemption.¹⁵

Part IV: Practical Application and Risk Mitigation

Understanding the legal theory behind the FLSA exemptions is only half the battle.

Alabama employers must be able to apply these complex rules correctly in their daily operations and take proactive steps to mitigate the significant financial risks associated with misclassification.

Section 10: When Salaried Means Overtime: The Salaried Non-Exempt Employee

One of the most persistent myths in wage and hour law is that paying an employee a salary automatically relieves an employer of the obligation to pay overtime.

This is fundamentally false.¹⁴

Any employee paid a salary who fails to meet

any one of the three exemption tests—the Salary Basis Test, the Salary Level Test, or the Duties Test—is classified as a salaried non-exempt employee.¹⁸

This means they are entitled to overtime pay for all hours worked over 40 in a workweek, just like an hourly employee.⁴⁰

Calculating overtime for a salaried non-exempt employee requires determining their “regular rate of pay.” The process is as follows:

1. Determine the Regular Rate: The weekly salary is divided by the number of hours that the salary is intended to compensate.⁸ For an employee with a fixed 40-hour workweek, the calculation is simple. If an employee earns a salary of $800 for a 40-hour week, their regular rate is $800 / 40 hours = $20 per hour.
2. Calculate Overtime Pay: For every hour worked over 40, the employee must be paid at a rate of 1.5 times their regular rate.¹⁸ In the example above, if the employee works 42 hours, they are owed 2 hours of overtime. The overtime pay would be 2 hours * ($20/hour * 1.5) = $60. Their total pay for the week would be their $800 salary plus $60 in overtime, for a total of $860.⁴¹

For salaried non-exempt employees whose hours vary from week to week, employers may have the option of using the Fluctuating Workweek (FWW) method of payment, provided certain criteria are M.T.⁴²

Under this method:

• The employee must have a clear understanding with the employer that the fixed salary is compensation for all hours worked in a week, whether few or many.
• The employee’s hours must actually fluctuate from week to week.
• The fixed salary must be large enough to ensure that the regular rate of pay never drops below the federal minimum wage of $7.25 per hour.
• The employee receives, in addition to their salary, an overtime premium of one-half (0.5) times their regular rate for all hours worked over 40.⁴²

The regular rate under the FWW method is calculated by dividing the fixed weekly salary by the total number of hours actually worked in that specific week.

For example, if an employee with a $900 weekly salary works 47 hours, their regular rate for that week is $900 / 47 hours = $19.15 per hour.

Their overtime premium is for 7 hours at half that rate: 7 hours * ($19.15 * 0.5) = $67.03.

Their total pay would be $900 + $67.03 = $967.03.

The FWW method is complex and must be implemented carefully to ensure compliance.⁴²

Section 11: Alabama-Specific Considerations: More Than Just the FLSA

While Alabama defers to the FLSA for its core wage and hour rules, there are a few state-specific laws that create unique obligations and considerations for employers.

1. Temporary Overtime Tax Exemption

In a notable recent development, Alabama enacted a law that makes overtime pay exempt from state income tax for a temporary period, effective from January 1, 2024, through June 29, 2025.44 While this law was intended as a benefit for workers, its specific language creates a significant administrative challenge and a potential source of internal friction for employers.

The law and the subsequent regulations issued by the Alabama Department of Revenue clarify that the tax exemption applies only to overtime paid to full-time hourly wage-paid employees.⁴⁴

The regulations explicitly state that the exemption does

not apply to salaried employees, including salaried non-exempt employees who are legally entitled to overtime pay under the FLSA.⁴⁴

This distinction creates a new, state-sanctioned inequity in take-home pay.

Consider two non-exempt employees who both work 45 hours in a week.

One is paid $20 per hour, and the other is a salaried non-exempt employee earning $800 per week.

Both are entitled to five hours of overtime under federal law.

However, under Alabama’s temporary statute, the hourly worker’s overtime earnings are not subject to state income tax, while the salaried worker’s overtime earnings are fully taxable.

This results in the hourly employee taking home more net pay for the exact same amount of overtime work.

This situation presents a complex human resources challenge, as employers may have to explain this pay disparity to their salaried non-exempt staff, a disparity created not by company policy but by the specific wording of a state law.

2. The Clarke-Figures Equal Pay Act

Enacted in 2019, the Clarke-Figures Equal Pay Act (CFEPA) adds a layer of state-level protection against pay discrimination.

This law prohibits Alabama employers from paying employees of one sex or race at a lower rate than employees of another sex or race for equal work on jobs requiring equal skill, effort, and responsibility, performed under similar working conditions.5 The CFEPA also includes a provision that forbids employers from refusing to interview, hire, or promote an applicant for employment because the applicant refused to provide their wage or salary history.43 This law aligns Alabama with a growing number of states seeking to close wage gaps by removing prior salary as a factor in setting compensation.

Section 12: The High Cost of Getting It Wrong: Misclassification, Audits, and Litigation

The consequences of misclassifying an employee as exempt when they are legally non-exempt can be severe and financially crippling.

Employee misclassification is one of the most common, and most costly, violations of the FLSA.¹³

Employers who are found to have misclassified workers face liability for:

• Back Overtime Pay: An employer can be required to pay all overtime that should have been paid for the previous two years. If the court finds the violation was “willful,” this look-back period extends to three years.¹¹
• Liquidated Damages: In addition to the back wages, the FLSA allows for an equal amount in “liquidated damages,” effectively doubling the amount of back pay owed, unless the employer can prove they acted in good faith and had reasonable grounds for believing they were not in violation.¹⁰
• Attorneys’ Fees and Court Costs: If the employee prevails in a lawsuit, the employer is typically required to pay the employee’s reasonable attorneys’ fees and court costs.¹⁰

Common violations that lead to these costly outcomes include not only misapplying the duties tests, but also requiring non-exempt employees to work “off the clock” (e.g., during unpaid meal breaks or before/after their shifts), failing to include all required forms of compensation like non-discretionary bonuses and commissions in the regular rate calculation for overtime, or giving employees sham titles to create the appearance of an exemption.³⁷

While a recent Supreme Court decision clarified that an employer only needs to prove that an exemption applies by a “preponderance of the evidence”—a lower legal standard than some courts had previously applied—this does not reduce the risk.¹²

Employers must still build a robust, well-documented defense grounded in the specific requirements of the FLSA.

The financial and reputational costs of a wage and hour lawsuit remain a significant threat to any business that fails to prioritize compliance.

Section 13: An Action Plan for Alabama Employers

Navigating the complexities of the FLSA in Alabama requires a proactive and diligent approach.

Treating employee classification as a “set it and forget it” task is a recipe for legal exposure.

The following action plan provides a framework for mitigating risk and ensuring compliance.

1. Conduct Regular Audits: Employee classification should be reviewed periodically, at least annually. An audit is especially critical whenever an employee’s job duties change significantly. Do not assume that a position that was correctly classified as exempt three years ago remains so today. A thorough audit involves reviewing the actual day-to-day responsibilities of each exempt employee against the strict criteria of the salary and duties tests.²⁰
2. Write Accurate Job Descriptions: Move away from generic, boilerplate job descriptions. Instead, craft descriptions that accurately reflect the actual primary duties of the position, using the specific language of the FLSA exemption tests. For example, for an executive role, the description should detail duties like “manages a department,” “directs the work of at least two full-time employees,” and “provides recommendations on hiring and firing that are given particular weight”.¹² This documentation can be critical in the event of a DOL audit or litigation.
3. Train Your Managers: The frontline supervisor is often the weakest link in FLSA compliance. A manager who improperly docks an exempt employee’s pay or allows a non-exempt employee to work off the clock can create substantial liability for the entire organization. It is imperative that all managers receive specific training on the fundamental rules of the FLSA, especially the counter-intuitive “no-docking” rule for exempt salaries and the absolute requirement to record and pay for all hours worked by non-exempt staff.
4. When in Doubt, Classify as Non-Exempt: For positions that are borderline or fall into a legal gray area, the most conservative and often most cost-effective long-term strategy is to classify the employee as non-exempt.¹² While this may result in some overtime payments, that cost is often negligible compared to the potential liability of a misclassification lawsuit, which can include two to three years of back pay, liquidated damages, and attorneys’ fees.
5. Consult Legal Counsel: The laws governing salaried employees are complex, subjective, and, as demonstrated by the battle over the salary threshold, constantly in flux. Engaging experienced employment law counsel to review exemption classifications, pay policies, and job descriptions is not a cost, but an investment in risk management. This is particularly crucial for Alabama employers, for whom the federal FLSA is the only law that matters.

Works cited

1. Wage and Hour Info – Alabama Department of Labor, accessed on August 6, 2025, https://labor.alabama.gov/Wage_and_Hour_Info.pdf
2. Wage and Hour Laws in Alabama – Nolo, accessed on August 6, 2025, https://www.nolo.com/legal-encyclopedia/alabama-wage-hour-laws-35465.html
3. Links for Employers – Alabama Department of Labor, accessed on August 6, 2025, https://labor.alabama.gov/business/
4. Alabama Labor Laws 2025 | Minimum Wage, Overtime, & More – Connecteam, accessed on August 6, 2025, https://connecteam.com/state-labor-laws/alabama/
5. Human Resources Legal Fact Sheet: Alabama – National Dairy FARM Program, accessed on August 6, 2025, https://nationaldairyfarm.com/wp-content/uploads/2019/06/Alabama-Fact-Sheet-2020-Update.pdf
6. Fair Labor Standards Act | Birmingham Employment Lawyer Beckum Law LLC, accessed on August 6, 2025, https://www.beckumlaw.com/practice-areas/employment-law/fair-labor-standards-act/
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