Who Makes Call about FLSA Exempt Status? Latest from DOL

If someone qualifies as exempt from the overtime requirements of the Fair Labor Standards Act (FLSA), is an exempt classification mandatory?

The Department of Labor (DOL) recently confirmed that an exempt classification isn’t a must, even if an employer is able to check all the boxes for exemption under the FLSA.

Furthermore, in cases where an employee would prefer to be classified as exempt, an exempt status still isn’t required.

That’s because it’s up to employers, not employees, to decide whether someone will be considered exempt from the overtime and minimum wage requirements of the federal law, the DOL explained.

The agency provided its remarks in one of several new opinion letters. Here’s a recap of the January 5, 2026, guidance.

Response to Internal Restructuring

In Opinion Letter FLSA 2026-1, the DOL answered questions asked by an employee who worked as a licensed clinical social worker (LCSW) for a healthcare organization.

After an internal restructuring, the employer discontinued the LCSW’s supervisory position. In conjunction with that, it changed the individual’s status from exempt to nonexempt – that included moving her from salaried to hourly in regard to pay basis.

While no longer qualifying for the executive exemption, the worker believed the learned professional exemption should be applied.

After all, her core job duties involved doing clinical assessments and psychosocial evaluations, making treatment plans and so on – i.e., tasks that required advanced knowledge.

However, the DOL pointed out that because her employer had decided to start paying her on an hourly basis, the learned professional exemption wouldn’t be an option.

In the opinion letter, the DOL went on to say that it’s “the employer – not the employee – that claims the exemption.” In other words, while the FLSA has many requirements, the law doesn’t state that employers must classify workers as exempt, even if they’re qualified.

FLSA and OBBBA

While some employees, like the one highlighted here, would prefer to be classified as exempt from the FLSA’s overtime requirements, others may have the opposite preference.

After all, thanks to the One Big Beautiful Bill Act (OBBBA), employees can deduct a portion of their overtime earnings on their personal income tax returns — but only if they’re nonexempt employees.

The OBBBA provides for the new overtime deduction starting with tax year 2025. However, employers aren’t required to report overtime earnings on Form W-2 until tax year 2026.

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• Payroll