The Fair Labor Standards Act (FLSA) is a federal labor law. The law aims to protect workers in the United States. Throughout the years, the FLSA instituted and expanded upon several >employment-based rights in the United States, including prohibitions against child labor, minimum wage establishment and employees’ rights to earn overtime pay.

Overtime pay is the compensation employees earn for any hours put in at work beyond the 40 hour workweek. The FLSA dictates, and the United States Department of Labor enforces, that employees are entitled to overtime pay. However, there are some categories of employees that do not qualify for overtime payment. 

The FLSA provides for exceptions to the overtime pay requirement. The FLSA outlines guidelines for employers, their human resources departments as well as employees to determine employees’ eligibility for overtime pay or whether they are exempt from receiving overtime pay.

Who is Exempt from Receiving Overtime Pay?

Employers must classify their job descriptions in one of two categories: exempt or non-exempt. In general, salaried workers are exempt from overtime pay while most hourly workers are eligible to benefit from it and therefore non-exempt. The FLSA requires that workers covered by the Act must be paid “time and a half” (one and one-half times their regular pay) for any hours exceeding 40 in a workweek.

In order to be exempt from overtime pay, there are two basic criteria that must be met: the employee must at least meet a threshold salary amount set in the FLSA and also must satisfy the necessary job duty criteria, which is also established in the FLSA. The salary and duty criteria labels are summarized and listed below.

Overtime Exemption Salary Requirements:

  • Employees that make at least $35,568 per year ($684 per week) may be exempt from receiving overtime pay if their job duties also match FLSA exemption criteria.

Overtime Exemption Job Duty Criteria for “White-Collar” Workers:

  • Executive job duties coupled with the aforementioned salary requirements exempt such workers from receiving overtime pay.
  • Administrative positions are similarly exempt from overtime pay.
  • Professionals that also make the minimum salary requirement are exempt from overtime pay.

Highly compensated employees, defined by the FLSA as earning over $107,432 per year, are exempt from overtime pay as long as they also meet certain job duty criteria. It is important to note that at least $684 of their salary must be paid weekly for highly compensated employees to qualify for exempt status. To be considered exempt, the employee’s job must be office-related and they must regularly perform executive, administrative or professional job duties.

Other examples of job positions that are generally exempt from overtime may include:

  • Salespeople;
  • Computer professionals that earn more than $27.63 per hour;
  • Transportation workers dealing in interstate or foreign commerce;
  • Small farm employees;
  • Seasonal and recreational workers; and
  • Delivery drivers.

In addition to the federally mandated FLSA, several states have their own rules and regulations regarding overtime criteria.

How is Overtime Pay Calculated?

For non-exempt employees, the FLSA calculates overtime as time and a half for the hours worked beyond the regular 40 hour workweek.

For example, assume a non-exempt employee makes $15 per hour and they work 45 hours during the current workweek.

  • Their regular pay would be $600 for the week ($15 x 40 hours).
  • Their overtime hourly rate would be $22.50 ($15 x 1.5).
  • Their overtime pay for this workweek would be $112.50 ($22.50 x 5 hours).
  • Their total paycheck amount for the workweek would be $712.50 ($600 + $112.50).

It is important to note that an employee that is eligible to receive overtime pay, must be physically present at their job location for the entire regular 40 hours of the workweek. In order to qualify for the overtime pay, the employee’s 40 hour workweek cannot include any sort of time off leave. 

For example, if they took eight hours of paid leave during the workweek, that eight hours cannot be tallied into the 40 hour workweek to qualify for overtime. The employee would instead earn at their regular hourly rate for all hours worked that week.

Who Classifies Employees as Exempt or Non-exempt?

Employers must determine employment benefits and classify their employees as exempt or non-exempt with the guidance of the FLSA as well as state and local employment rules and regulations. 

It is important for human resources departments and employers to understand the implications of properly classifying their employees. An employer that fails to pay eligible employees overtime pay, may face severe penalties.

Should I Call an Attorney with Questions Related to Overtime Pay Exemptions?

A local employment law attorney can assist and provide you with guidance regarding your overtime exemption case. To avoid penalties and treat employees fairly, it is crucial for employers to understand and implement overtime pay according to local and federal rules. 

Employees may be entitled to receiving overtime pay and should know their rights. A knowledgeable employment law attorney can assist you in resolving any work-related compensation issues you may have, including overtime pay exemptions.