Every worker you engage through YunoJuno's US Employer of Record (EOR) must be classified under the Fair Labor Standards Act (FLSA) as either exempt or non-exempt. This determines whether the worker is entitled to overtime pay and mandatory meal and rest breaks, and it affects the cost of the engagement if overtime is actually worked.

Classification is handled automatically, in-platform, from the moment you create a US EOR contract. This article explains how that process works.

The FLSA is the federal law that sets minimum wage, overtime, and related standards for US workers. Every US W-2 worker must be classified as exempt or non-exempt under it.

Non-exempt workers are entitled to overtime pay, at least 1.5 times their regular rate (time and a half), for hours worked over 40 in a week. Some states also require overtime for hours worked beyond a set number in a single day, or for working a certain number of consecutive days, and the multiple can be higher than 1.5 times depending on the state and the hours involved. They're also entitled to mandatory meal and rest breaks.

Exempt workers aren't subject to overtime requirements, though they must still be paid at least the applicable rate threshold to qualify as exempt in the first place. Most exempt roles are salaried, but the computer employee exemption means certain hourly roles can qualify as exempt too.

A job title alone never determines exemption status. Classification depends on two things: the worker's pay meeting the applicable federal or state rate threshold, and their actual job duties matching one of the legal categories of exempt work, for example the level of independent judgment they exercise, or the kind of specialized or computer-related work they do. Meeting the pay threshold isn't enough on its own. YunoJuno's Compliance team always carries out this duties review before a role is confirmed exempt.

YunoJuno checks the rate you've entered against the exemption threshold for the worker's location, using the threshold in effect on the contract's start date. Hourly and salaried contracts are handled differently from here.

It's classified non-exempt automatically. You'll see the reasoning, including the threshold that applied and how the rate compares to it, directly on the contract.

You'll be asked a short set of questions in-platform to test for the computer employee exemption. If the answers show the role doesn't meet the exemption, the contract is classified non-exempt. If they suggest it qualifies, the contract is classified exempt and held for Compliance review.

It's classified non-exempt automatically, with the reasoning shown. A non-exempt salaried contract can't be offered as is: you'll need to either increase the salary to at least the applicable threshold, or convert the contract to an hourly engagement, which then follows the hourly flow above.

It's classified exempt and held for Compliance review. Unlike hourly contracts, there's no in-platform question set for salaried roles. The full duties determination, including any Highly Compensated Employee assessment, is more involved and is carried out by Compliance.

Any contract classified exempt is held until a member of the Compliance team confirms the classification as exempt or non-exempt. If confirmed exempt, the contract can proceed to be offered as normal. If confirmed non-exempt, you'll be notified by email, and a task is created, explaining the outcome, the reasoning, and the impact on the engagement. A salaried contract confirmed non-exempt this way can't be offered as salaried: you'll need to convert it to hourly and set a new hourly rate. This determination is final. Once converted, it doesn't go back through the rate threshold check or the computer exemption questions.

Non-exempt classifications never reach Compliance and aren't reviewed, since there's no duties question left to resolve once a role is classified non-exempt.

Yes. If you believe a role genuinely qualifies as exempt, you can contest a non-exempt classification with Compliance. If they agree, they can confirm the role as exempt instead.

Editing a contract's rate, engagement type (hourly or salaried), or work location re-runs classification from the start, even if Compliance has already reviewed it. Editing the start date only re-triggers classification if it changes the applicable rate threshold. This only applies before the worker accepts the contract, since contracts can't be edited afterward.

Most states follow the federal thresholds. A handful set their own, higher figures:

New York is worth calling out separately: its Professional exemption doesn't set its own state salary threshold, so it defers to the federal $684 per week figure, which is what YunoJuno applies statewide, rather than the higher county-specific Executive/Administrative tiers ($1,275 per week in New York City, Nassau, Suffolk, and Westchester; $1,199.10 elsewhere in the state). This threshold only decides whether a role is routed to Compliance for the duties test, not whether it's exempt, so using the lowest applicable figure means more roles get properly reviewed rather than skipping the duties test on salary alone.

Because the platform checks and applies the correct threshold automatically at contract creation, you don't need to look these up yourself. State thresholds are typically updated annually; federal thresholds change far less often.

FLSA Classification appears in its own section on the contract, grouped with (but clearly separate from) Worker Classification, so the two can't be confused. Wherever you see a classification outcome, look for the "What does this mean?" link or the ? icon for an in-context explanation of what exempt and non-exempt status mean for the engagement.

If you have any questions about FLSA classification, contact hello@yunojuno.com.