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I’m Paid a Salary. Does That Mean I’m Exempt From Overtime?

On Behalf of | Aug 4, 2021 | Fair Labor Standards Act |

If you work for a set salary, you may be under the impression that you aren’t entitled to extra pay if you work more than 40 hours in a week. That may not be true. Depending on your job duties and the rate you are paid, you may be entitled to time-and-a-half after you reach 40 hours. This is because being salaried is only one factor in determining whether you are exempt.

One reason you might be confused about this is that some people are exempt from the Fair Labor Standards Act (FLSA) and corresponding state laws that require overtime pay. There are five major exemptions: executive, administrative, professional, computer and outside sales. In each case, part of what qualifies a worker for exempt status is being paid on a salary basis.

To be clear, being classified as “exempt” means you are exempt from the FLSA and state wage laws. Being exempt means you are not entitled to the minimum wage, the overtime premium, or certain other legal protections. If you don’t qualify for a specific exemption, you are non-exempt and entitled to protection.

How are exemptions from the FLSA determined?

There are slightly different rules for each type of exemption (executive, administrative, professional, computer and outside sales). However, several of them have these things in common:

  • The employee must be paid on a salary basis
  • The employee must earn $684 per week or more
  • The employee’s primary job duties must support the specific type of exemption being considered – this usually includes having substantial management responsibilities and requires the exercise of discretion and independent judgment over matters of significance

Note: the outside sales and computer exemptions do not include a requirement that your job be managerial in nature and require the exercise of discretion and independent judgment.

Being salaried isn’t enough for an exemption

According to the Department of Labor, being paid on a salary basis simply means that you regularly receive a predetermined amount of compensation during each pay period. In all but a few situations, you are paid your full salary even if you work fewer than 40 hours a week. That does not mean, however, that you should not receive the overtime premium if you work more than 40 hours in a week.

This is because all of the exemptions from the FSLA require more than just a salary basis. To qualify for the exemption, you must be paid at least $684 per week. If you are not paid $684 per week or more, you are NON-EXEMPT, even if you are paid a salary.

If you are paid $684 per week or more, you may still be non-exempt, meaning that you are entitled to overtime. That is because most employees do not meet the requirements for one of the exemptions.

In other words, you could be paid on a salary basis, earn $684 or more each week, and still be non-exempt (entitled to overtime). This is because your job duties are not substantially managerial in nature or do not require the exercise of discretion and independent judgement over matters of significance.

These rules can be somewhat confusing, but the ultimate point is that some workers are non-exempt even though they are paid a salary. This could be true even if their employer marks them “EXEMPT” on their paychecks or directly says that they are exempt.

Your employer doesn’t get to say who is exempt from overtime. Employee classification is a legal issue.

If you are unsure whether you should be receiving overtime pay, it’s important to talk to an experienced employment law attorney. Get answers about your classification before you make a complaint, so you know where you stand. A lawyer can also help you draft your complaint strategically so you can minimize the chance of your employer retaliating.