Am I Entitled to Overtime Pay Even if I’m on a Salary?

December 1, 2013

The answer to the question, “am I entitled to overtime pay even if I’m on a salary?” is yes if you’re a nonexempt salaried employee and no if you’re an exempt employee. It sounds simple enough. But, determining who is exempt and who is not can be tricky. The Fair Labor Standards Act (FLSA) and accompanying Department of Labor regulations establish the standards for overtime pay. The FLSA recognizes the two types of salaried employees, exempt and non-exempt, and specifies conditions under which an employee is exempt or nonexempt from the rules established for overtime pay. As such, certain salaried employees are entitled to overtime pay while others are not.

Nonexempt salaried employees are employees who are paid on a salary basis but are still entitled to overtime. One of the greatest misconceptions about overtime, for employers and employees, is thinking that just because you are paid a salary, you are not entitled to overtime pay. The vast majority of employees in this country are non-exempt, meaning they are entitled to overtime pay. Nonexempt is the “default” category for workers. Exemptions are the exception to the general rule.

Exempt employees are not entitled to the overtime pay requirements of the FLSA. The exemptions mainly fall into three categories: The Executive Exemption, The Administrative Exemption, and The Professional Exemption. While there are other exemptions, such as the “outside sales” exemption, the “casual babysitter” exemption, and the “retail commissioned sales” exemptions, these are specifically targeted and would require a much more lengthy discussion than allowed here. To qualify for the exemption, employees must be paid a salary of no less than $455 per week, and engage in specific responsibilities. The requirements can be roughtly summarized as follows for the three main exemptions:

Executive Exemption

• primary duty must be managing the business or a recognized division of it
• regularly supervise the work of 2 or more employees
• have authority to hire and fire, or to make recommendations for hiring, firing, and promotional decisions

Administrative Exemption

• primary duty must be performing non-manual work directly related to the management of the business
• primary duty must include the exercise of discretion and independent judgment on significant matters

Professional Exemption

• primary duty must be work requiring “advanced knowledge” or “intellectual in nature”
• advanced knowledge must be in a field of science or learning; and
• the advanced knowledge must be gained through a “prolonged course” of intellectual education

In addition, certain highly compensated employees (those making $100,000 or more per year) who perform at least one of the duties of an exempt executive, administrative or professional employee and white-collar workers are exempt from overtime pay. However, manual laborers or other blue-collar workers as well as police, fire fighters, paramedics and other first responders are entitled to overtime pay.

Employees who do not fall into one of these three categories or other statutory exemptions, are entitled to overtime equal to 1.5 times their hourly pay. For nonexempt, salaried employees, the hourly rate is the total weekly salary divided by the number of hours required to work in a week, usually 40. Overtime pay only applies to hours worked in excess of 40 hours in a single week. Contrary to popular belief, overtime pay is not required for weekends and holidays unless overtime hours are worked on those days. The FLSA does not require additional pay for weekends or nights nor does it require double time for working those days. Additional pay for work on the weekends or other times may be specified through an agreement between an employer and employee.

Standards as established by the FLSA represent the minimums for standards. They cannot be waived or reduced. However, they may be exceeded. Employees may also be subjected to local laws, regulations, ordinances or an employer’s contractual or collective bargaining agreement that establish higher wages, higher overtime premiums or shorter workweeks than those established by the FLSA.

Remember, even if you are paid on a salary basis, you are still entitled to overtime pay.