Published on:

Can Salaried Employees Receive Overtime Pay Under the FLSA?

above-the-bar-logo-no12According to the current provisions under the federal Fair Labor Standards Act (FLSA), a law governing, among other things, wages for workers, in general salaried employees making more than $455 per week are not entitled to overtime pay under the federal law (however there may be exceptions as it can be a fact specific inquiry); whereas salaried employees earning less than $455 per week are entitled to overtime pay. In New York and California, however, state employment laws have set salary thresholds higher. Because the overtime rules can be complex and difficult to navigate, you should call our office at (800) 893-9645 to arrange for a confidential consultation with our Award-Winning Employment Attorneys. Our Lead Employment Attorney can be found here. If you are an employer, we will advise you of your overtime obligations under the existing laws.

I Heard President Obama is Going to Provide Overtime Protection for More Salaried Employees. Is this True?

Yes. Under the existing provisions of the FLSA, certain “executive, administrative and professional” employees are exempt from receiving overtime. Known as the “white collar” exemption, the provision has only been updated twice in the last 40 years. In 1975, the salary threshold exempting salaried workers from overtime was $250. In 2004, the salary threshold was set at $455 per week and hasn’t been adjusted for inflation since then. Under the current salary threshold, it is possible for a salaried employee to make less than the minimum wage. For example, suppose a salaried manager at a fast food restaurant is making $455. If the manager works 65 hours in one week, he or she would be making $7 per hour–less than the minimum wage. Commenting on the existing FLSA salary exemption rules, U.S. Secretary of Labor Tom Perez stated, “The current salary threshold is only $455–below today’s poverty line for a worker of four. So under the current rules, even if you’re poor, you may not qualify for overtime. That doesn’t make sense.”

To change the current situation for salaried employees, Obama signed a Presidential Memorandum on March 13, 2014 requiring the U.S. Department of Labor to use its authority to update the FLSA’s salary threshold to provide millions of salaried workers with overtime protection they currently do not have. The President acknowledged that the salary threshold for overtime protection has failed to keep up with the rate of inflation and needs to be changed. The Memorandum did not state what the new threshold will be.

Should Employers be Concerned about the Proposal to Change Overtime Rules?

Yes. The new changes could affect your salaried employees’ right to receive overtime pay. If you don’t pay them the overtime, you could be subject to penalties, back taxes as well as back wages for the employees. Therefore, in order to help you navigate your way through the newly proposed overtime changes, you need to call our Top Employment Attorneys at (800) 893-9645 to schedule a confidential consultation advising you of your obligations to pay your employees overtime.

How Is Overtime Pay Calculated?

Overtime is calculated at a rate of one and one half the time of an employee’s regular rate of pay for time worked over forty hours in one workweek. For instance, if an employee regularly earns $10 per hour, and if he or she works 45 hours in a week, then he or she is entitled to $75 in overtime pay ($15 x 5 = $75). If an employee performs two different job duties at two different rates of pay while working for the same company, then the rate of pay for that week is calculated by taking the weighted average of such rates. For instance, an employee may make $10 per hour for answering the phones and $12 per hour for working in the warehouse. Suppose this employee, in the course of one work week, works 25 hours answering the phone and 20 hours working in the warehouse. The rate of pay would be calculated as follows: (25 hours x $10 = $250) + (20 hours x $12 = $240) = $490; the total earnings in this case is $490, which, when divided by the total number of hours worked, 45 hours in this case, equals $10.88, which is considered the employee’s rate of pay. This rate of pay would then be used to calculate overtime pay.

It is important to note that overtime is determined by hours worked, not by when you work, such as a Saturday or a holiday. In addition, there is no limit on the amount of overtime workers aged 16 and older can work. Finally, overtime pay may not be waived. Even if an employee signs an agreement stating that he work overtime, he or she is still entitled to overtime compensation for work performed over 40 hours.

Call the law office of Villanueva & Sanchala at (800) 893-9645 if you are an employer or employee and have questions or concerns about overtime pay and requirements.

Disclaimer: 

Thank you for visiting our Blog. This blog provides general information and thoughts about various employment law issues primarily in the New York Tri-State area and occasionally in other areas. You are welcome to read the posts. However, do not construe any content on this blog as legal advice or the creation of an attorney-client relationship. Again, we provide the content only for informational purposes. You should not make decisions based information on our blog since the application of the law depends on the facts and each situation may be different. In addition, the law in most jurisdictions is different and changes constantly and we make no representations that any information on our blog has been updated. The Blog should not be used as a substitute for competent legal advice from an experienced employment law attorney in your state or jurisdiction.