Everyone pretty much understands what they mean when they talk about salaried employees versus hourly employees. The first group is paid at a flat amount per pay period. The second group is paid by a rate per hour. That also means that they are paid at an overtime rate for all hours over 40 in a week. In some states, like California, they may even be eligible for the overtime rate for hours over 8 in one day.
Many employers figure if someone has “Manager” in their title that they may pay them as a salaried employee and they don’t have to pay overtime. This is not necessarily true. The payment of overtime is governed by a Federal law called the Fair Labor Standards Act (FLSA). This act includes minimum wage, overtime pay and child labor protections for workers in the United States. Employees who are covered by this Act are called ‘Non-Exempt’ meaning that they do not qualify for one of the exemptions for certain types of workers and therefore must be paid overtime.
In order to be ‘Exempt’ and not eligible for overtime an employee must meet certain qualifications regarding their pay rate and their actual job duties. The most common exemptions are for employees in actual executive, administrative, professional and outside sales positions. This is based on actual job duties, not their job title or job description.
For the FLSA section 13(a)(1) exemptions to apply, an employee generally must be paid on a salary basis of no less than $455 per week and perform certain types of work that:
- Is directly related to the management of his or her employer’s business, or
- Is directly related to the general business operations of his or her employer or the employer’s clients, or
- Requires specialized academic training for entry into a professional field, or
- Is in the computer field, or
- Is making sales away from his or her employer’s place of business, or
- Is in a recognized field of artistic or creative endeavor.
The Department of Labor has developed a web tool to help workers identify who is entitled to minimum wage and overtime protection under the FLSA and those workers who, by law, are not covered by these requirements. You can find it at www.dol.gov/elaws/overtime.htm.
Article by WAC Solution Partners- Employer Solutions
Arlie Skory
Have questions about the above article or other HR questions? Please contact Arlie Skory at Arlie.Skory@wacptrs.com
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