FLSA Opinion Letter: Reclassification from Exempt to Nonexempt

The Department of Labor (DOL) released a Fair Labor Standards Act (FLSA) opinion letter on January 5, 2026, reiterating that jobs must meet three specific requirements to be classified as exempt.

To be classified as exempt, the position must be paid on a salary basis, the amount of the salary paid must meet the minimum salary threshold, and the job duties must meet one of the duties tests.

The Situation

A Licensed Clinical Social Worker (LCSW) stated that their employer recently restructured and as a result, eliminated the position’s supervisory role. The remaining core job responsibilities, which include consistent application of professional discretion and judgement in clinical decisions, remained unchanged. As a result of the restructuring, the employee’s position was converted from exempt to nonexempt and the basis of pay was converted to an hourly rate. The employee believes the employer has misclassified the LCSW position as nonexempt when it meets the requirements of the professional exemption test.

Findings

In the opinion letter, the DOL agreed that it is likely that the LCSW position’s primary duty requires advanced knowledge acquired through specialized intellectual instruction, and that this would qualify the position under the professional exemption. However, to qualify for the professional exemption, the job must additionally meet the required salary basis. The employer’s decision to pay the position on a per hour basis means it no longer meets the compensation requirements for exemption.

Key Takeaways

The FLSA only prohibits the misclassification of a nonexempt employee as an exempt one. Employers have the discretion to classify jobs as nonexempt as long as they pay at least minimum wage and the overtime premium for hours worked in excess of 40 hours in a workweek.