When is Overtime Pay Required?

Posted: April 8, 2015 By Krigel & Krigel

Overtime pay is an important consideration for employers nationwide. And it should be; non-exempt employees are eligible to receive one-and-a-half times their regular wage for each hour worked over 40 in a workweek. Of course, for many reasons including uncertainty of how the law should be applied, many employees are not paid proper overtime wages. And in some cases, underpaid employees seek recovery through a civil lawsuit.

It is important for employers to understand the specifics of overtime pay, including when it is required and which workers are exempt from overtime pay.

Basics of Overtime Pay

Overtime pay is regulated by the Fair Labor Standards Act (FLSA), a federal law that governs wage and hour requirements in the United States. Under the FLSA, all non-exempt employees must receive time-and-a-half for all hours worked over 40 during a workweek. In contrast to this, employees that are exempt from overtime rules may work an unlimited amount in a workweek and only be compensated at their regular wage.

What positions qualify as exempt? In general, a variety of positions may be considered exempt, including those who qualify for the following exemptions: “executive,” “administrative,” and “professional.” Each of these categories has several requirements and all must be met for the employee to qualify for the exemption. For example, each of these categories requires that the employee be paid at least $455 per week ($910 bi-weekly, $1971.67 monthly, or $23,660 annually), but each also has additional requirements that must be met for the exemption to apply.

A slew of other types of workers may also be considered exempt under the FLSA including some employees in computer-related occupations and individuals involved in “outside sales.” Again, both of these categories are defined by the FLSA and have been interpreted by the Department of Labor and the courts in specific ways. If you are unsure whether your job falls under one of these exemptions, you should consult with an attorney about your specific situation.

The FLSA is a law designed to protect the worker and employees are generally presumed not exempt. If you are an employer, it can be well worth the investment to carefully review which employees you have classified as exempt to make sure job changes have not created an overtime issue of which you may be unaware.

Misclassification of Workers

Often, employers make the mistake of considering all employees who earn a salary to be exempt, but that is a mistake. Another common mistake is that a company may consider all employees with the title of “manager” as exempt, regardless of their duties. Courts and the Department of Labor will look at specific job duties to determine whether the law’s exemptions apply; not titles. These types of mistakes can lead to penalties imposed by the Department of Labor or, even worse, a lawsuit brought by the individual or the Department of Labor. Either way, these issues can prove to be extremely expensive for employers.

Steps to Reduce Liability

All employers should spend time reviewing how their employees are compensated to ensure they are paying their employees properly. Employment law attorneys can help. Employers are encouraged to contact an employment attorney to learn more about how to classify and pay their employees .

Krigel & Krigel maintains a great Employment Law Group in Kansas City and you can contact them anytime with questions you may have.


Image: Thinkstock/Winnieliao
*This article is very general in nature and does not constitute legal advice. Readers with legal questions should consult with an attorney prior to making any legal decisions.

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