Wage and Overtime Pay Laws

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 What Are the Overtime Pay Requirements?

The Fair Labor Standards Act (FLSA) establishes the regulations for overtime pay in the United States. Generally, if an employer allows or requires an employee to work beyond their regular hours, the employer must compensate the employee for the overtime work.

Under the FLSA, employees are entitled to overtime pay for any hours worked beyond a 40-hour workweek. However, there is no requirement for overtime pay for hours worked on weekends or holidays.

There isn’t a specific limit on the number of hours an employee can work in a workweek, according to the FLSA. Employers may establish different workweeks for different employees or groups of employees.

Overtime requirements cannot be bypassed through agreements between the employer and employees. Additionally, an employer cannot prevent an employee from working overtime nor demand prior authorization for overtime work.

Employers must pay for any overtime work covered by the FLSA, and employees have the right to receive compensation for the work they have completed. Overtime pay is calculated based on the average hourly rate, determined from the total earnings during the workweek. Earnings may be derived from piece rate, salary, or commission-based pay.

What Are the Standards for Minimum Wage?

Each state sets its own standards and regulations for wages and work conditions to prevent unfair treatment. The federal minimum wage established by the FLSA is currently $7.25 per hour. However, each state has its own minimum wage laws, and employees are entitled to receive the higher of the federal or state minimum wage.

Some local cities and counties have implemented “living wage” laws, setting a higher minimum wage for companies contracted to conduct business within the local area or government. In these cases, employers must pay the highest applicable minimum wage, whether it is federal, state, or local.

Although the minimum wage determines the hourly rate, employers are not required to pay employees hourly. It is legally acceptable as long as the total amount paid divided by the total number of hours worked is equal to or greater than the minimum wage.

Do All Employers Have to Pay the Minimum Wage?

Not all employers are required to pay the minimum wage. Two criteria must be met for an employer to be obligated to pay its employees the minimum wage under the FLSA: First, the business must generate $500,000 or more in annual sales. Second, the employees must be involved in “interstate commerce,” which generally means conducting business between states.

The following employees are exempt from receiving the federal minimum wage:

  1. Independent contractors;
  2. Outside salespersons;
  3. Workers on small farms;
  4. Switchboard operators employed by phone companies with no more than 750 stations;
  5. Employees of seasonal amusement or recreational businesses;
  6. Employees of local newspapers with a circulation of less than 4,000;
  7. Newspaper delivery workers; and
  8. Students and learners as defined by law.

State or local laws may still protect employees not covered under federal law. Therefore, it is beneficial to research local regulations to determine if an employee is exempt from minimum wage requirements.

For employees who earn tips, the minimum wage guidelines can differ. Federal law permits employers to pay a lower hourly rate to employees who regularly receive tips as long as the combined wages and tips meet the minimum wage requirement.

Which Employees Are Exempt from Receiving Overtime Pay?

If an employer is covered by the FLSA or a state’s overtime law, all employees are entitled to overtime pay unless an exception applies.

The following workers are exempt and, therefore, ineligible for overtime pay:

  1. Executive, Administrative, and Professional Roles (Salaried): These white-collar jobs often involve management, decision-making, or specialized knowledge. Employees in these positions are typically paid a salary rather than an hourly wage and may be exempt from overtime pay if they meet specific salary and job duty requirements.
  2. Independent Contractors: These people are not considered employees of a company. Instead, they are self-employed and work under a contract for specific tasks or projects. Since they are not employees, they are not eligible for overtime pay.
  3. Volunteer Workers: Volunteers willingly offer their services without expecting payment. These people often work for non-profit organizations, charitable institutions, or religious groups. They are not paid employees and are not entitled to overtime pay.
  4. Outside Sales Personnel: These employees work away from their employer’s office, selling products or services directly to customers. Their primary job is to make sales, and they are often paid through commissions. Due to the nature of their work, they are exempt from overtime pay.
  5. Certain Computer Specialists: Some computer professionals, such as systems analysts, software engineers, or programmers, may be exempt from overtime pay if they meet specific salary and job duty requirements. Their work typically involves advanced computer skills and expertise.
  6. Workers in Amusement Parks or County Fairs: Employees working in seasonal amusement parks, carnivals, or county fairs may be exempt from overtime pay. This exemption applies because these establishments operate for a limited time each year and have unique employment needs.
  7. Employees of Organized Camps or Religious Conference Centers: Workers employed by non-profit educational or religious camps and conference centers may be exempt from overtime pay. These establishments often have distinctive employment conditions and requirements.
  8. Employees of Certain Small Newspapers: People working for small newspapers with a circulation of fewer than 4,000 may be exempt from overtime pay. This exemption recognizes the unique challenges faced by small publications and aims to support their continued operation.
  9. Newspaper Delivery Workers: People who deliver newspapers to customers’ homes are generally exempt from overtime pay. This exemption acknowledges the unique nature of their work, as they typically have flexible hours and work independently.
  10. Workers in Fishing Operations: Employees involved in fishing activities, such as catching, processing, or canning fish, may be exempt from overtime pay. This exemption considers the fishing industry’s seasonal and unpredictable nature.
  11. Babysitters: Those who provide childcare services on a casual basis, such as babysitting for friends or neighbors, are generally exempt from overtime pay. This exemption allows for flexibility in arranging childcare and supports the informal nature of these arrangements.
  12. Criminal Investigators: Criminal investigators, such as detectives and special agents, often work irregularly and are responsible for solving crimes or conducting investigations. Due to the nature of their work and the public interest in effective law enforcement, they may be exempt from overtime pay.

What Are the Requirements for Overtime Pay?

The United States Department of Labor (DOL) implemented new policies regarding overtime pay, effective January 1, 2020. These policies help over a million Americans become eligible for overtime pay.

One major change involved increasing the minimum salary requirement for FLSA overtime exemptions. The policies also increased the annual compensation requirement and allowed employers to use nondiscretionary bonuses or incentive payments to satisfy the required salary standard for exempt executive, administrative, and professional employees.

The policies also adjusted the special salary levels for workers in US territories and the motion picture industry. However, laws vary between states, so it is beneficial to research local guidelines for overtime pay and minimum wage requirements.

When Do I Need to Contact a Lawyer?

As an employee, it is crucial to understand your rights regarding overtime pay and minimum wage. As an employer, it is essential to ensure compliance with applicable federal, state, or local laws.

In either situation, consulting an employment lawyer on LegalMatch for guidance can help you move past your wage/overtime pay issue.

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