DOL Opinion Letter FLSA2026-5: Can Exempt Employees Be Paid Hourly for Nonexempt Work?

The U.S. Department of Labor (DOL) issued Opinion Letter FLSA2026-5 on May 28, 2026, addressing a common question for employers: can exempt employees paid on a salary basis also receive hourly pay for performing nonexempt work? The answer is yes—under specific conditions. This letter provides critical guidance for HR compliance in 2026, especially for organizations that rely on flexible staffing models.

Background: FLSA Exempt vs. Nonexempt Classifications

The Fair Labor Standards Act (FLSA) requires most employees to be paid at least the federal minimum wage and overtime for hours worked beyond 40 in a workweek. However, certain employees classified as “exempt” are not entitled to overtime if they meet specific salary and duties tests. The most common exemptions include executive, administrative, professional, outside sales, and computer employee categories.

To qualify as exempt, employees generally must be paid on a “salary basis”—receiving a predetermined amount each pay period that is not subject to reduction based on quality or quantity of work. The current federal salary threshold is $684 per week ($35,568 annually), though some states have higher thresholds. Employers must also ensure the employee’s primary duties meet the exemption criteria (e.g., primarily performing office work directly related to management or general business operations for the administrative exemption).

Historically, paying exempt employees an hourly wage for any work risked undermining the salary basis test, potentially exposing employers to FLSA violations and back-wage liability. Opinion Letter FLSA2026-5 clarifies the boundaries.

Key Takeaways from Opinion Letter FLSA2026-5

1. Primary Duty Test Is Key

The DOL’s analysis centers on whether the employee’s primary duty remains exempt. In the letter, the employer had Nursing Professional Development Specialists (exempt) who occasionally worked additional shifts as staff nurses (a nonexempt role). The DOL concluded that if the exempt work continues to be the employee’s primary duty—meaning it is the most important, requires the greatest time, or has the greatest consequence—then paying hourly for separate, nonexempt tasks does not destroy the exemption.

2. Salary Basis Must Be Maintained

Employees must continue to receive their full guaranteed salary in any week they perform any work, regardless of how many hours they work in the exempt role. The additional hourly pay for nonexempt work is treated as supplemental compensation, not a substitute for the salary. The employer cannot reduce the salary based on the amount of nonexempt work performed.

3. Nonexempt Work Must Be Occasional and Voluntary

The DOL emphasized that the nonexempt work should be occasional and voluntary. In the opinion, the additional shifts were infrequent and not a regular part of the employee’s schedule. If nonexempt work becomes regular or exceeds 50% of total working time, the primary duty analysis may shift, and the exemption could be lost.

4. Fact-Specific Analysis

Each case depends on the specific facts. Employers cannot simply assume that any combination of exempt and nonexempt duties preserves exempt status. The DOL warned that if the balance of duties changes over time—for example, if an exempt manager starts spending most of their time on nonexempt production work—the exemption may no longer apply.

Compliance Steps for Employers

To safely implement the guidance from FLSA2026-5, employers should take the following steps:

• Review Job Duties Regularly: Conduct periodic audits to ensure that each exempt employee’s primary duty remains exempt. Document the percentage of time spent on exempt vs. nonexempt tasks.
• Update Pay Practices: Ensure that exempt employees receive a guaranteed salary of at least $684 per week (or the applicable state minimum) regardless of hours worked. Any additional hourly pay for nonexempt work should be clearly identified as supplemental and not reduce the salary.
• Limit Nonexempt Work: Keep nonexempt assignments occasional and voluntary. Implement policies that require prior approval before an exempt employee takes on nonexempt duties.
• Maintain Accurate Time Records: Even for exempt employees performing nonexempt work, track hours worked in the nonexempt role to verify that it remains a minor portion of total time and to calculate supplemental pay correctly.
• State Law Compliance: Some states have higher salary thresholds or stricter rules for exemptions. For example, California requires a minimum salary of $1,280 per week (as of 2026) and a duties test that may be more restrictive. Always verify state-specific requirements.

Risks of Misclassification and Wage Claims

Misclassifying employees as exempt when they should be nonexempt can lead to costly FLSA violations. Employers may face back wages for unpaid overtime, liquidated damages (equal to back wages), civil penalties, and attorney’s fees. Collective actions under the FLSA are common, and even a single misclassification can trigger a broad lawsuit.

Common pitfalls include:

• Paying exempt employees on an hourly basis without maintaining a guaranteed salary.
• Allowing exempt employees to perform primarily nonexempt work, eroding the primary duty requirement.
• Failing to adjust classification when job duties change over time.

The DOL’s opinion letter provides a safe harbor for employers who follow its guidelines, but it does not eliminate the need for ongoing vigilance.

How AIGovHub’s HR Compliance Tools Can Help

Navigating FLSA exemptions and pay practices is complex, especially with evolving DOL guidance and state-specific rules. AIGovHub’s HR compliance module offers interactive tools to help HR teams stay compliant:

• Exemption Classification Tool: Assess whether a role qualifies for an exemption based on salary and duties tests, incorporating both federal and state requirements.
• Pay Practice Audit: Review current pay structures to identify risks of salary basis violations or improper hourly payments for exempt staff.
• Regulatory Alerts: Receive notifications when DOL opinion letters, state law changes, or new salary thresholds are published.
• Policy Template Library: Access customizable policies for managing exempt employees performing nonexempt work, including approval workflows and recordkeeping requirements.

By using AIGovHub’s tools, employers can reduce the risk of misclassification, streamline compliance audits, and ensure their pay practices align with the latest FLSA guidance.

Conclusion

Opinion Letter FLSA2026-5 provides valuable clarity for employers who need flexibility in staffing. Exempt employees can be paid hourly for occasional nonexempt work, as long as their primary duty remains exempt and the salary basis is preserved. However, the analysis is fact-specific, and employers must regularly review job duties and time allocation to avoid losing the exemption.

Stay ahead of FLSA compliance challenges with AIGovHub. Explore our HR compliance tools today to safeguard your organization against wage and hour claims.