An employer who demands or allows an employee to work overtime is typically mandated to pay the worker premium for such overtime work. Workers covered by the Fair Labor Standards Act (FLSA) must obtain overtime pay for hours worked over 40 in a workweek of at least one and one-half times their regular pay rates. The FLSA does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest unless overtime hours are worked on such days.
The FLSA, with some exceptions, requires bonus payments to be included as part of an employee’s regular rate of pay in computing overtime.
Additional pay for working weekends or nights is a point of agreement between the employer and the worker. The FLSA does not demand extra pay for weekend or night work or double-time pay.
Which Workers Are Permitted to Overtime?
If your company is covered by the FLSA or your state’s overtime law, your workers are qualified for overtime unless they fit an exception. The following workers are “exempt” from the federal overtime law, meaning that they fit into an exception and are accordingly not permitted overtime:
- Executive, administrative, and professional workers who are paid on a salary basis
- Independent contractors
- Volunteer workers (this exception seldom applies to for-profit businesses)
- Outside salespeople
- Certain computer specialists who make at least $27.63 per hour
- Workers of seasonal amusement or recreational businesses, such as ski resorts or county fairs
- Workers of organized camps or religious or nonprofit educational conference centers that function for fewer than seven months a year
- Employees of certain small newspapers
- Newspaper deliverers
- Workers employed in fishing operations
- Seamen
- Employees who work on small farms
- Certain switchboard operators
- Criminal investigators, and
- Casual domestic babysitters and individuals who provide companionship to those unable to care for themselves
What Are Administrative, Executive, and Professional Employees?
The most common and confusing exceptions to the overtime laws are for so-called “white collar” employees. The law defines workers as “administrative, executive, or professional” who need not be paid overtime.
To be deemed exempt under the FLSA, administrative, executive, or professional workers must be paid on a salary basis and must spend most of their time completing job responsibilities that demand the use of prudence and independent judgment. Some states have assembled additional requirements that make it more difficult to fall within these exemptions, though, so you should also check with your state’s law before categorizing an employee as exempt.
What Are Overtime Pay Exemptions?
The Fair Labor Standards Act (FLSA) is a federal labor law. The law strives to shield employees in the United States. Throughout the years, the FLSA initiated and expanded upon several employment-based rights in the United States, including prohibitions against child labor, minimum wage establishment, and workers’ rights to earn overtime pay.
Overtime pay is the compensation workers earn for any hours put in at work beyond the 40-hour workweek. The FLSA dictates that employees are entitled to overtime pay, and the United States Department of Labor enforces it. However, some categories of employees do not qualify for overtime pay.
The FLSA provides for exceptions to the overtime pay requirement. The FLSA outlines guidelines for employers, their human resources departments, and employees to determine employees’ eligibility for overtime pay or whether they are exempt from receiving overtime pay.
Who Is Exempt from Obtaining Overtime Pay?
Employers must classify their job descriptions in one of two categories: exempt or non-exempt. In general, salaried workers are exempt from overtime pay, while most hourly workers are qualified to benefit from it and therefore non-exempt. The FLSA mandates that employees covered by the Act must be paid “time and a half” (one and one-half times their regular pay) for any hours exceeding 40 in a workweek.
To be exempt from overtime pay, two basic criteria must be met: the employee must at least meet a threshold salary amount set in the FLSA and satisfy the necessary job duty criteria, which are also established in the FLSA. The salary and duty criteria labels are summarized and listed below.
Overtime Exemption Salary Requirements:
- Employees that make at least $35,568 per year ($684 per week) may be exempt from obtaining overtime pay if their job responsibilities also match FLSA exemption criteria.
Overtime Exemption Job Duty Criteria for “White-Collar” Workers:
- Executive job duties coupled with the aforementioned salary requirements exempt such employees from obtaining overtime pay.
- Administrative roles are likewise exempt from overtime pay.
- Experts that also make the minimum salary requirement are exempt from overtime pay.
Highly compensated workers, defined by the FLSA as earning over $107,432 per year, are exempt from overtime pay if they meet specific job responsibility criteria. It is essential to mention that at least $684 of their salary must be paid weekly for highly compensated workers to qualify for exempt status. To be deemed exempt, the worker’s job must be office-related, and they must regularly perform executive, managerial or professional job duties.
Other examples of job positions that are generally exempt from overtime pay include:
- Salespeople;
- Computer experts that make more than $27.63 per hour;
- Transportation employees dealing in interstate or foreign commerce;
- Small farmworkers;
- Seasonal and recreational workers; and
- Delivery drivers.
In addition to the federally mandated FLSA, several states have their own laws and ordinances regarding overtime criteria.
How Is Overtime Pay Computed?
For non-exempt workers, the FLSA computes overtime as time and a half for hours worked beyond the standard 40-hour workweek.
For instance, assume a non-exempt employee makes $15 per hour, working 45 hours during the current work week:
- Their regular pay would be $600 for the week ($15 x 40 hours).
- Their hourly overtime rate would be $22.50 ($15 x 1.5).
- Their overtime pay for this workweek would be $112.50 ($22.50 x 5 hours).
- Their total paycheck amount for the workweek would be $712.50 ($600 + $112.50).
It is essential to mention that an employee that is qualified to receive overtime pay must be physically present at their job location for the entire regular 40 hours of the workweek. To qualify for the overtime pay, the employee’s 40-hour workweek cannot include time off leave.
For instance, if they took eight hours of paid leave during the workweek, that eight hours cannot be tallied into the 40-hour workweek to qualify for overtime. Instead, the employee would earn at their regular hourly rate for all hours worked that week.
Who Classifies Workers as Exempt or Non-exempt?
Employers must determine employment benefits and categorize their workers as exempt or non-exempt with the guidance of the FLSA and state and local employment rules and regulations.
Human resources departments and employers need to comprehend the importance of correctly classifying their workers. An employer that fails to pay eligible employees overtime may face severe penalties.
Should I Call an Attorney with Questions Related to Overtime Pay Exemptions?
A local employment law attorney can assist you with guidance regarding your overtime exemption case. Employers must understand and implement overtime pay according to local and federal rules to avoid penalties and treat employees fairly.
Workers may be entitled to receiving overtime pay and should know their rights. A knowledgeable employment law attorney can assist you in resolving any work-related compensation issues you may have, including overtime pay exemptions.
