A W-2 therapist paid only by the session may not be exempt from federal overtime rules, because a per-session rate is usually not a salary. If the therapist is not exempt, the practice owes at least the minimum wage for every hour worked, notes and meetings included, and overtime past 40 hours in a week. A guaranteed weekly salary of at least $684, with pay per session on top, meets the exemption's salary test. Whether it holds also depends on the clinician's duties and on how the salary compares with what they usually earn, both covered below.
Most group practices are exposed to this. They commonly pay clinicians by the session or by a split of what each session brings in, and neither is a salary. Texas supervisor trainer Kate Walker writes that "many group practices operate on a percentage-based model where the practice takes 30–50% of session fees" (Kate Walker Training, October 17, 2025). Everything below applies to a split as much as to a flat rate per session. The cost of getting it wrong arrives years later. An employer who underpays overtime owes the unpaid amount "and in an additional equal amount as liquidated damages" (29 U.S.C. §216(b)).
This post is about employees on a W-2, read against federal rules and the Texas Payday Law on the day it was published. It isn't legal advice. An employment attorney should read your pay plan before you change it.
Who is exempt from overtime?
A therapist is exempt only if two tests are both met. The first is about duties. The Department of Labor's learned professional test asks for a primary duty that is "the performance of work requiring advanced knowledge", knowledge "customarily acquired by a prolonged course of specialized intellectual instruction" (DOL Fact Sheet 17A). The regulations name fields such as law, medicine and accounting. They do not name counseling, social work or marriage and family therapy, so a therapist meets the duties test, if at all, under the general wording.
The second test is about pay, and it is where per-session plans fail. The employee must "be paid a salary of at least $684 per week", the level the Department of Labor restored after a federal court vacated its 2024 rule (DOL, May 14, 2026). Physicians, lawyers and teachers are excused from the salary test. Therapists are not on that list (29 CFR 541.304).
Is a per-session rate a salary?
Usually not. A salary is a fixed amount that is "not subject to reduction because of variations in the quality or quantity of the work performed" (29 CFR 541.602). A per-session rate falls whenever the caseload does, which is exactly what a salary may not do.
The rules do allow a fee basis, "an agreed sum for a single job regardless of the time required for its completion" (29 CFR 541.605). But a fee is meant for a unique job. A Department of Labor memo from 1994, quoted in a federal appeals case, said "payment on a 'per visit' basis is probably not the type of fee payment arrangement contemplated by the regulations." The same court still held that home health nurses paid per visit were exempt (Fazekas v. Cleveland Clinic, 6th Cir., 2000). So the question is not settled everywhere, and that court's circuit does not include Texas. The safe reading for a Texas practice is that a therapist paid only per session is not exempt.
What a non-exempt therapist is owed
Overtime for pay per session works the way it does for piece work. The regular rate is the week's total earnings "divided by the number of hours worked in the week", and each hour past 40 earns an extra "one-half this regular rate of pay" (29 CFR 778.111). The hours include more than sessions. "Work not requested but suffered or permitted is work time" (29 CFR 785.11), so notes written at home at night count.
Here is one week for a full-time clinician paid $65 a session. The hours outside sessions are an example, not a benchmark.
Does $43.33 matter? For one week, not much. Across a year and a team of ten, with liquidated damages that match it, it does. And the larger exposure is the hour count itself. A practice that pays per session usually keeps no record of hours worked, so it cannot show what it owed.
What a plan that keeps the exemption looks like
Guarantee a salary of at least $684 a week, and pay for sessions on top of it. The rules let an employer "provide an exempt employee with additional compensation without losing the exemption" when the plan includes "a guarantee of at least the minimum weekly-required amount paid on a salary basis" (29 CFR 541.604). The guarantee has to hold in a light week. If the guaranteed amount is cut when clients cancel or the caseload is low, it is no longer a salary under 541.602.
The guarantee also has to be a real share of the pay. When pay is worked out by the hour or the shift with a guaranteed floor, the same section asks for "a reasonable relationship" between the floor and what the employee actually earns, met when the guarantee "is roughly equivalent to the employee's usual earnings" for a normal week. A per-session plan with $684 as a floor under $2,000 weeks may be read the same way. That is the plan to take to counsel before anyone signs it.
The $684 is a weekly figure, and the rule gives no lower one for part-time work. A part-time clinician paid less than $684 a week is not exempt, whatever the plan calls the pay.
Many practices set the salary above $684 to keep a new clinician steady while the caseload fills. The guide to what a therapist hire costs works through that ramp.
What if a clinician stays non-exempt?
That can work too, and for part-time clinicians it is often the only honest choice. Pay an hourly rate for time outside sessions and an amount for each session, record every hour, and pay overtime on the regular rate as 778.111 describes. The per-session part still rewards a full caseload, and the hour records protect both sides.
If you pay some clinicians as 1099 contractors instead, the guide to what a hire costs covers when Texas and the IRS would call them employees.
Can you deduct no-shows or clawbacks from pay?
Be careful with both. For a salaried exempt employee, a deduction because the week had fewer sessions is a deduction for "quantity of the work performed", and it puts the exemption at risk (541.602). For any employee in Texas, the Payday Law lets an employer withhold wages only by court order, by law, or with "written authorization from the employee to deduct part of the wages for a lawful purpose" (Texas Labor Code §61.018). Whether a payer's clawback is a lawful purpose for a deduction is a question for your attorney. The post on insurer clawbacks covers how to answer the payer first.
The Payday Law also sets how often you pay. An exempt employee is paid "at least once a month" and anyone else "at least twice a month" (Texas Labor Code §61.011).
What to do this week
- List every W-2 clinician and write down how each one is paid: salary, per session, share of collections or a mix.
- For anyone paid only per session or by collections, assume they are non-exempt until counsel tells you otherwise.
- Start recording hours worked for those clinicians this week, including notes, supervision and meetings. Pick one place they enter time, name who approves it each week, and include notes written at home.
- Price a salary-plus-sessions plan for each of them, at a salary of at least $684 a week that holds in a light week.
- Take the pay plan, the hour records and any deduction clauses to an employment attorney before you change anyone's pay.
Sources
- Fact Sheet 17A, Exemption for executive, administrative, professional, computer and outside sales employees, U.S. Department of Labor.
- News release on the salary level, May 14, 2026, U.S. Department of Labor.
- 29 CFR 541.304, 541.602, 541.604 and 541.605, the salary and fee rules.
- 29 CFR 778.111, overtime for pay by the piece, and 29 CFR 785.11, work suffered or permitted.
- 29 U.S.C. §216, penalties and liquidated damages.
- Fazekas v. Cleveland Clinic Foundation Health Care Ventures, U.S. Court of Appeals for the Sixth Circuit, 2000.
- Why counselors are leaving group practices and what comes next, Kate Walker Training, October 17, 2025.
- Texas Labor Code chapter 61, payment of wages, sections 61.011 and 61.018.
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