Are salaried employees exempt from overtime pay?

By: J. Matthew Kelly, Esq.
Clark, Campbell, Lancaster & Munson, P.A.

The Fair Labor Standards Act (the “FLSA”) is a federal law which regulates, among other things, minimum wage and overtime pay. The FLSA generally sets a workweek at forty hours and requires that employees receive overtime pay for any excess work hours over forty.

However, not every employee is covered by the FLSA. While the FLSA has expansive coverage, it does have certain requirements that must be met in order for employers and individuals to be covered. The FLSA generally covers companies that have revenue in the amount of $500,000.00 or more, as well as federal and local government employers. An individual can be covered, regardless of the revenue of the company they work for, if they are involved in interstate commerce. Interstate commerce is interpreted broadly under the FLSA and may include individuals who make telephone calls outside of their home state, process payments from out of state, and produce goods that will be sent out of state.

One common misconception under the FLSA is that salaried employees are exempt from the overtime pay requirements of the FLSA simply because they are paid a salary rather than on an hourly basis. While in many cases a salaried employee is an exempt employee under the FLSA, they still must meet one of the exemptions created by the FLSA to be exempt from the overtime requirements. Generally, for a salaried employee to be exempt from overtime pay they must meet one of the following “white collar” exemptions: the executive exemption, the administrative exemption, the professional exemption, the computer employee exemption, the outside sales exemption, or the highly compensated employee exemption.

Each of these exemptions requires that the employee make at least $455 per week in compensation. Beyond the salary requirement, each exemption requires that the employee have certain job duties. It is not enough to pay someone $455 per week and give them a certain job title. The employee’s duties must meet certain requirements. For example, to qualify under the administrative exemption, the employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and this primary duty must include the exercise of discretion and independent judgment with respect to matters of significance. Each exemption has specific duties and requirements that must be met by the employee for an exemption to apply.

“Blue collar” workers, or those workers who perform manual work with their hands, physical skills, and energy are not exempt from the overtime requirements no matter how highly they are paid or how they are compensated. Police, firefighters, paramedics, and other first responders are not exempt from the overtime requirements of the FLSA. In

many instances employees working in agriculture as defined by the FLSA are actually exempt employees even though it may seem like they would be included with those workers who work with their hands and physical skills.

The important takeaway when dealing with exemptions is that just because someone has a salary or a certain job title does not exempt them from overtime. The real focus should be on the duties of that employee to determine if their job function meets the requirements for an exemption under the FLSA.

The FLSA is a complex federal law with many nuances that have not been specifically addressed in this article. When determining whether an employee is exempt under the FLSA I recommend that you have an attorney participate in the analysis and advise you as to that employee’s status under the FLSA. Treating a non-exempt employee as an exempt employee can be a costly mistake resulting in litigation and the awarding of damages. Damages awarded can be double the amount of the actual unpaid wages owed as a result of treating a non-exempt employee as an exempt employee.

J. Matthew Kelly is an attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. in Lakeland. Questions can be submitted to thelaw@cclmlaw.com.

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