Full question:
Where can I find information about overtime pay for salaried employees?
- Category: Employment
- Date:
- State: National
Answer:
The Fair Labor Standards Act (FLSA) outlines employers' responsibilities regarding minimum wage and overtime pay for non-exempt employees. A common misconception is that salaried managerial employees are automatically exempt from overtime pay. This is not always true; whether a salaried employee is entitled to overtime depends on their specific job responsibilities.
If a company fails to pay eligible employees overtime, it can face significant claims for damages. Employers must pay non-exempt employees time and a half for hours worked over 40 in a workweek. For salaried employees, the hourly rate is calculated by dividing their weekly salary by 40. The FLSA allows for a look-back period of three years for unpaid overtime claims, and employers may also be liable for liquidated damages, which can double the amount owed, plus attorney's fees, which can be substantial.
Exempt employees under the FLSA are those who fall within specific categories and are not entitled to overtime pay. The most challenging exemption for employers is the white-collar exemption, which includes executive, administrative, and professional exemptions. The classification is based on actual job duties rather than job titles.
1. **Executive Exemption**: Employees must earn a salary of at least $250 per week, primarily manage the business or a department, and regularly supervise at least two employees. Examples include CEOs and project managers.
2. **Administrative Exemption**: Employees must earn a salary of at least $250 per week and perform office or non-manual work that involves discretion and independent judgment related to management policies or operations. Examples include executive assistants and consultants.
3. **Professional Exemption**: Employees must earn a salary of at least $250 per week and perform work that requires advanced knowledge in a field of science or learning, or artistic endeavor. Examples include lawyers and engineers.
For the white-collar exemptions, the FLSA uses two tests: the short test and the long test. The short test is commonly applied, while the long test applies to employees earning slightly less but meeting other criteria. Misclassifying employees can lead to significant financial exposure for employers.
To minimize risks, employers should periodically review employee classifications and job responsibilities to ensure compliance with FLSA standards. Changes in corporate structure or employee roles may affect classification, so it's wise to conduct regular audits, ideally with the help of a human resources professional or an experienced employment lawyer.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.