Overtime Exemptions
On this page, we’ll do our best to clarify this complicated subject for you, but if you have remaining questions, you may wish to speak to a local attorney who is knowledgeable about overtime, since it is impossible to anticipate every problem that may have arisen in your workplace.
1. I hear certain jobs being referred to as “exempt” or “non-exempt.” What does being “exempt” mean?
The term “exempt” is used to refer to employees and/or jobs that do not qualify for overtime protections, while “non-exempt” refers to employees and/or jobs that are eligible for overtime. There are certain types of jobs which are explicitly exempt from either any protection under the Fair Labor Standards Act (FLSA) (including its minimum wage, child labor, and record-keeping provisions) or just the FLSA’s overtime provisions. They include the following types of jobs:
Exempt from all FLSA coverage:
Employees of certain seasonal amusement or recreational establishments;Employees of certain small newspapers and switchboard operators of small telephone companies;Seamen employed on foreign vessels;Employees engaged in fishing operations;Employees engaged in newspaper delivery;Farm workers employed on small farms (i.e., those that used less than 500 “man days” of farm labor in any calendar quarter of the preceding calendar year);Casual babysitters and persons employed as companions to the elderly or infirm; andHighly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 or more (which must include at least $455 per week paid on a salary or fee basis) who customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee. (See questions 7-26 below for more information.)
Exempt from FLSA overtime coverage:
Certain commissioned employees of retail or service establishments;Auto, truck, trailer, farm implement, boat or aircraft salespersons employed by non manufacturing establishments primarily engaged in selling these items to ultimate purchasers;Auto, truck, or farm implement parts clerks and mechanics employed by non manufacturing establishments primarily engaged in selling these items to ultimate purchasers;Railroad and air carrier employees, taxi drivers, certain employees of motor carriers, seamen on American vessels, and local delivery employees paid on approved trip rate plans;Announcers, news editors and chief engineers of certain non metropolitan broadcasting stations;Domestic service workers who reside in their employers’ residences;Employees of motion picture theaters; andFarmworkers.
If you have one of these types of jobs, you may not be eligible for overtime pay. However, you may wish to speak to a local attorney who is knowledgeable about overtime, as your job may not fully fit the FLSA’s definition of jobs that are excluded from coverage and/or there may be state law exceptions that apply to your job.
Again, not necessarily. Employees otherwise subject to the Fair Labor Standards Act’s protections can still be considered “exempt,” and ineligible for overtime protection, if both of the following criteria are met:
The employee is paid a salary fee (not paid on an hourly basis) of not less than $684 per week, ANDThe employee performs the duties of an exempt employee.
For more information on these two subjects, please see the questions below, and this Department of Labor fact sheet.
Being paid on a “salary basis” means an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work With a few exceptions, salaried employees cannot have their salary reduced based on the “quality or quantity” of work performed.
For example, if employees receive a salary of $600 per week when they work 40 hours, an employer cannot pay those employees $525 when they work 35 hours (effectively paying the employees $15/hour rather than a salary of $400 per week).
Also, if the employee is ready, willing and able to work, deductions may not be made for time when work is not available, such as, for example, weather or security-related facility closures.
The salary basis pay requirement for exempt status does not apply to some of the “learned professions,” such as lawyers, doctors, or school teachers. These jobs are exempt even if the employees are paid hourly. Another exception is for “computer professionals” (as defined under the law), who may be exempt if they are paid on a salary basis or if they are paid hourly at a rate of at least $27.63. See this Department of Labor fact sheet for more information.
Unless specifically exempted, employees covered by the Act must receive overtime pay for hours worked in excess of 40 in a workweek at a rate not less than time and one-half their regular rates of pay. There is no limit in the Act on the number of hours employees aged 16 and older may work in any workweek. The Act does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, as such. The regular rate of pay cannot be less than the minimum wage. See the Department of Labor website for more information.
Exempt Employees
Deductions from pay are permissible when an exempt employee is absent from work for one or more full days for personal reasons other than sickness or disability; for absences of one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness; to offset amounts employees receive as jury or witness fees, or for military pay; for penalties imposed in good faith for infractions of safety rules of major significance; or for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions. See the Department of Labor website for more information. Also, an employer is not required to pay the full salary in the first or last week of an exempt employee’s employment (unless that employee works the full week), or for weeks in which an exempt employee takes unpaid leave under the Family and Medical Leave Act.
Non-exempt Employees
Fair Labor Standards Act does not permit employers to make deductions from employees’ wages if it takes him/her below minimum wage unless the deductions are required by law. This includes things like state and federal taxes, social security, and child support orders.
In general, an employer may also make deductions for things that cut into minimum wage provided they are authorized by the employee and they are for the employee’s benefit. That includes things like group health insurance, savings bonds, charitable contributions, and wage advances.
Deductions made from wages for such items as cash or merchandise shortages, employer-required uniforms, and tools of the trade, are not legal to the extent that they reduce the wages of employees below the minimum rate required by the FLSA or reduce the amount of overtime pay due under the FLSA. See the Department of Labor website for more information.
State law requirements regarding pay deductions vary. Consult an employment attorney for information on your state. See the Workplace Fairness Attorney Directory for a listing of employment attorneys.
The employer will lose the exemption if it has an “actual practice” of making improper deductions from salary. Factors to consider when determining whether an employer has an actual practice of making improper deductions include, but are not limited to: the number of improper deductions, particularly as compared to the number of employee infractions warranting deductions; the time period during which the employer made improper deductions; the number and geographic location of both the employees whose salary was improperly reduced and the managers responsible; and whether the employer has a clearly communicated policy permitting or prohibiting improper deductions. If an “actual practice” is found, the exemption is lost during the time period of the deductions for employees in the same job classification working for the same managers responsible for the improper deductions.
Isolated or inadvertent improper deductions will not result in loss of the exemption if the employer reimburses the employee for the improper deductions. See the Department of Labor website for more information.
The Fair Labor Standards Act provides an exemption from overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. It also exempt certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $684* per week. Employers may use nondiscretionary bonuses and incentive payments (including commissions) paid on an annual or more frequent basis, to satisfy up to 10 percent of the standard salary level. Job titles do not determine exempt status. In order for an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the Department’s regulations. See the Department of Labor website for more information on requirements for executive, administrative, and professional exemptions.
The Fair Labor Standards Act is enforced by the Wage-Hour Division of the US Department of Labor. The Wage-Hour’s enforcement of the Fair Labor Standards Act is carried out by investigators stationed across the U.S., who conduct investigations and gather data on wages, hours, and other employment conditions or practices, in order to determine whether an employer has complied with the law. Where violations are found, they also may recommend changes in employment practices to bring an employer into compliance.
It is a violation to fire or in any other manner discriminate against an employee for filing a complaint or for participating in a legal proceeding under Fair Labor Standards Act.
If you need further information about your state’s overtime law and/or wish to report a potential state overtime law violation, contact your state agency. See the Department of Labor’s website for state information.
There are several different methods under the Fair Labor Standards Act for an employee to recover unpaid overtime wages; each method has different remedies.
Wage-Hour may supervise payment of back wages.
The Secretary of Labor may bring suit for back wages and an additional penalty, called “liquidated damages.”
An employee may file a private lawsuit for back pay and an equal amount as liquidated damages, plus attorney’s fees and court costs. An employee may not bring a lawsuit if he or she has been paid back wages under the supervision of Wage-Hour or if the Secretary of Labor has already filed suit to recover the wages.
The Secretary of Labor may obtain an injunction to restrain any person from violating Fair Labor Standards Act, including the unlawful withholding of proper overtime pay.
See the Department of Labor website for more information.
Your state overtime law may have different methods for recovery of unpaid wages, and different remedies to be awarded to those who succeed in proving a violation. See the Department of Labor website for a list of state agencies.
Do not delay in contacting the Wage and Hour Division or your state agency to file a claim. There are strict time limits in which charges of unpaid wages must be filed. To preserve your claim under federal law, you must file a lawsuit in court within 2 years of the violation for which you are claiming back wages, except in the case of an employer’s willful violation, in which case a 3-year statute applies. However, as you might have other legal claims with shorter deadlines, do not wait to file your claim until your time limit is close to expiring. You may wish to consult with an attorney prior to filing your claim, if possible. Yet if you are unable to find an attorney who will assist you, it is not necessary to have an attorney to file your claim with the state and federal administrative agencies.
Your state overtime law may have different deadlines for recovery of unpaid wages. See the Department of Labor website for a list of state agencies.
Select your state from this list.
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