By Thomas L. Boyer
Which employees qualify for overtime pay?
Among the employment issues governed by the Federal Fair Labor Standards Act (“FLSA”) is a determination of which employees receive overtime pay (non-exempt employees) and which employees do not receive overtime pay (exempt employees). In most instances, the required overtime pay is time and one-half for all hours worked in excess of 40 in a workweek. For example, an employer may select any workweek that is convenient e.g. 12:01 a.m. Monday through midnight Sunday or 7:00 a.m. Monday through 6:59 a.m. the following Monday provided it is a period of 168 consecutive hours. A workweek may be changed for legitimate business reasons or multiple workweeks can be applied to different classifications of employees provided the workweek is not designed or modified for the purpose of circumventing the law’s overtime requirements.
During my 34 years as an employment lawyer, the most common misconception concerning overtime is the following: If an employee is not paid by the hour but is paid a salary, then the employee automatically qualifies as exempt from overtime compensation. I have repeatedly consulted with clients who maintain this mistaken belief. Just because an employee is paid by salary does not mean the employee is exempt. However, with the exception of computer-related personnel who earn approximately $28 per hour, no employee who is paid by the hour is exempt.
Employees are exempt solely based upon their job duties and the work they perform. Job titles are irrelevant. Bestowing job titles such as manager, supervisor, chief administrator and accountant do not make these employees exempt unless they fit within the definitions set forth in the law. The 5 categories of exempt employees are:
- Executive Employees: An executive employee is one whose primary duty is management of a recognized department or subdivision of a business, who regularly directs the work of 2 or more other employees and possesses enough authority to at least effectively recommend hiring and firing.
- Administrative Employees: An administrative employee is one whose work is directly related to the management or business operations of the employer and whose primary duty includes the exercise of discretion and independent judgment.
- Professional Employees: Professional employees are those whose work requires knowledge of an advanced type in a field of science or learning acquired through specialized education, such as accounting and engineering. Based solely on a professional exemption, the world’s best bookkeeper is non-exempt and the world’s worst degreed accountant is exempt.
- Computer Employees: Computer systems analysts, computer programmers, software engineers, computer systems designers and similarly sophisticated computer-related employees are exempt. Employees who repair computer hardware or primarily perform data input are non-exempt.
- Outside Sales Employees: Finally, outside sales employees are those who customarily and regularly work away from the employer’s place of business obtaining orders and making sales.
The FLSA only requires that employees receive overtime pay for hours worked in excess of 40 in one workweek. In no situation does the law dictate double time and 40 hours worked means that employees actually work 40 hours in a workweek. Lunch periods, holidays and paid vacations do not count toward time worked for overtime purposes unless the employer agrees to do so.
This article is a brief overview of one aspect of the FLSA (the regulations extend for hundreds of pages). Violations of the FLSA can result in back pay, interest and penalties. If you are not sure whether your employees are exempt, it is best to discuss the matter with competent counsel.
For further information regarding these matters, please contact Mr. Boyer at 248.740.5666 or
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