If You Are a Salaried Employee, Are You Entitled to Overtime Pay?
Interviewer: A lot of businesses just offer employees a salary, and then they expect you to work however many hours it takes to get the job done. What about those companies?
Michael: Yes, that’s a good question. Many people that I’ve spoken to think that if somebody is paid a salary as opposed to an hourly wage, they’re not entitled to overtime. However, that’s not the state of the law as it exists now.
By Law, Salaried Employees Are Entitled to Overtime Pay
Even if an employee is on a salary basis and they work overtime, they’re entitled to be compensated for that overtime. What’s typically done to figure that out is you divide their salary, their weekly salary, by 40 to get their pay rate.
There Are Exemptions to the Fair Labor Standards Act
Then you would multiply that by one and a half to calculate what their overtime rate is, so for any hours over 40, they would be entitled to that bonus. Now the Fair Labor Standards Act does have a number of exemptions, which means that not everyone is covered by the Fair Labor Standards Act. There are a number of different exemptions that we can discuss where those people would not be entitled to an overtime bonus.
Managers That Meet Certain Criteria Are Not Eligible for Overtime Compensation
One category would be managers. Somebody that’s a manager in a company that supervises more than two employees and is able to exercise their own discretion and has a say in the hiring and firing of other employees, that type of person would most likely be exempt under the Act based on the managerial exemption. We have seen plaintiffs come in, and we’ve had to turn some of them down because we felt that we would not be able to get around the managerial exemption.
Highly Skilled Workers Are Exempt
Some of the other exemptions include a highly skilled exemption, which means that professionals such as accountants, lawyers, and doctors would most likely be looked at as highly skilled individuals, and they would not be entitled to an overtime bonus for hours worked over 40.
We have come across cases that were very good cases, and then the employers were able to establish that they were exempt from the overtime law, so in those cases, we weren’t too successful.