By Adam C. Maxwell and Adam N. Hirsch

The Department of Labor clarifies Exempt Status for Learned Professionals.

On January 5, 2026, the United States Department of Labor (“DOL”) issued a series of Opinion Letters. One of these – FLSA2026-1 – addressed whether and how an employee can be reclassified from exempt to non-exempt status for purposes of applying the federal Fair Labor Standards Act (“FLSA”). The DOL concluded that because the employee’s compensation changed from salary to hourly, it was likely that employee would no longer be considered exempt.

Relevant Law and Regulations

In order to understand the DOL’s conclusion, let’s articulate some definitions first. The FLSA requires covered employers to pay their employees at least the federal minimum wage of $7.25 for their first 40 hours worked each week. For hours worked in excess of 40 per week, the employee must be paid 1.5x their regular rate of pay, a/k/a/ “time-and-a-half” or “overtime.”

The FLSA contains a number of exceptions to its 40-hour overtime rule. Section 13(a)(1) of that statute excludes employees employed in a “bona fide executive, administrative, or professional” capacity from the minimum wage and overtime requirements. Regulations defining these terms may be found at 29 C.F.R. Part 541. One of the largest categories of exempt professionals are what the regulations call “learned professionals.” See 29 C.F.R. 541.301. “Learned professional” is not rigidly defined, but a learned professional’s “primary duty” must involve “work requiring advanced knowledge” that “must be customarily acquired by a prolonged course of specialized intellectual instruction.” Id. Per these regulations, a certified public accountant is a learned professional, but a bookkeeper typically is not. A registered nurse is usually a learned professional, but a licensed practical nurse typically is not, because that job does not require a specialized advanced academic degree.

The “executive” portion of the FLSA’s exemption to its overtime rule has been interpreted to apply to workers who customarily and regularly direct the work of two or more other full-time employees or their equivalent, plus additional requirements. See 29 C.F.R. 541.100. The Department of Labor also prescribes a salary threshold for application of these exceptions. This threshold has been the subject of recent litigation. FLSA2026-1 does not address or resolve this threshold issue.

A Social Worker’s Inquiry

On January 5, 2026, the Department of Labor issued an opinion letter in response to a query from a licensed clinical social worker (LCSW). The LCSW was hired as a salaried, exempt employee. For the past several years, the LCSW was a supervisor of other workers.

Recently, the LCSW’s employer reclassified them to be an hourly, non-exempt employee. As a part of this reclassification, the LCSW’s supervisory role was “discontinued.” The LCSW

asserted that they continued in a clinical role and asked the DOL if they properly remained an exempt employee despite their employer’s reclassification.

The DOL’s analysis begins with a footnote that is worth pausing on. The DOL writes:

Although employees and employers often use the terms “salaried” and “exempt” interchangeably, they are not synonyms. Payment on a salary basis alone does not make an employee exempt from the minimum wage or overtime provisions of the Act; an employee also generally must meet a salary level test and meet various duty requirements. Indeed, while the FLSA’s exemption for learned professional employees generally requires that exempt employees receive a salary, not all exemptions do. Moreover, the Act does not prohibit paying non-exempt employees a salary, as long as the proper overtime premium is also paid.

This point is critical for employers to keep in mind. Paying an employee a salary does not automatically exempt them from the minimum wage and overtime rules. Likewise, paying an employee hourly may risk that employee’s exempt status simply as a matter of pay structure.

The DOL went on to conclude that while the LCSW employee met the requirements for being a “learned professional” under 29 C.F.R. 541.301, that was not the end of the analysis. The employee’s change in compensation may have dropped him or her below the compensation threshold, and the switch to hourly wages could make the learned professional exception inapplicable as well. More generally, the DOL noted that it is the employer, not the employee, who elects to claim or not claim the learned professional exception.

Takeaways for Employers

As the DOL states in FLSA2026-1, employers need not treat their employees as exempt, even if those employees meet the criteria for that designation. Employers may treat a learned professional employee as non-exempt, so long as it complies with the minimum wage and overtime rules that apply when doing so.

A further takeaway for employers from this DOL Opinion Letter is that while employers have the freedom to designate their employees as exempt or non-exempt in accordance with the dictates of the labor market and their business needs, they cannot have it both ways. If an employer chooses to designate an otherwise qualified learned professional as non-exempt, that employer must comply with minimum wage and overtime rules. Nor can an employer avoid those rules by designating as exempt its employees who do not meet the job duty or salary requirements for exemption from the FLSA. The FLSA is only one of a number of federal, state, and local statutes that govern employee compensation. For these and other issues, businesses should consult legal counsel.

Contact

If SFBBG can be of assistance, please contact employment attorneys Adam Maxwell ([email protected]) or Adam Hirsch ([email protected]).

This article has been updated as of March 3, 2026.