Salaried Workers and Overtime Pay


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Are you eligible for overtime pay? Just because you are a salaried employee doesn't mean you are automatically disqualified. Many employees are robbed from their entitled overtime pay due to lack of knowledge about their rights. This SlideShare presentation will clear up some common myths about salaried workers and overtime pay to help you to make sure you are receiving the proper entitled pay.

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Salaried Workers and Overtime Pay

  1. 1. Salaried Workers and Overtime Pay What Employees Need to Know
  2. 2. Are Salaried Workers Eligible For Overtime Pay? • Many employees are told, “If you are paid a salary you are not entitled to receive overtime pay.” ▫ This is a myth • Being paid a salary doesn’t automatically disqualify you from overtime pay • The next few slides will discuss what determines if a salaried employee is entitled to receive overtime pay
  3. 3. Exempt or Non-Exempt? Here are the Questions You Should Ask • Ask yourself these questions to determine if your job is exempt or non-exempt from overtime labor laws: ▫ 1. Are you paid at least $455 each week? ▫ 2. Do your job duties and responsibilities meet certain requirements?
  4. 4. The US Department of Labor’s Definition of Salaried Pay • According to the US Department of Labor, “[b]eing paid on a salary basis means an employee regularly receives a pre-determined amount of compensation each pay period on a weekly, or less frequent, basis” and that the “pre-determined amount cannot be reduced because of variations in the quality or quantity of the employee’s work”. Image Credits: Bill Holmes
  5. 5. How Your Pay Can Effect Overtime Eligibility • Consider both the amount you are paid and the structure • Just because you are paid at least $455 each week does not mean you are paid on a “salary basis” • An exempt employee must receive their full salary for any week in which they do any work, regardless of the number of days or hours worked • Employees do not need to be paid for any workweek in which they perform no work
  6. 6. Can Your Job Duties and Responsibilities Effect Overtime Eligibility? • For workers who are Supervisors, Manager and the like, the Executive Exemption may apply • For those who actively participate in the operation of a business, the Administrative Exemption may apply • Other exemptions may apply to certain professional, computer, and outside sales employees • Industry specific exemptions may apply to workers that range from movie theater workers to seamen and to maple sap workers
  7. 7. When Are Employees Exempt From Overtime Regulations? • Only if both the salary test and the duties test are met can a job be properly classified as exempt from overtime regulations
  8. 8. How are Non-Exempt Salaried Employees Paid? • While they may be paid a salary, they must also be paid overtime for all hours worked over forty each workweek. • They are entitled to receive overtime pay at the rate of one and a half times their regular rate of pay
  9. 9. What is Chinese Overtime? • A common method referred to as a fixed salary for fluctuating hours • The regular rate of an employee will vary from week to week • The regular rate is obtained each week by dividing the salary by the number of hours worked in the week ▫ It cannot be less than the applicable minimum wage in any week • Since straight-time compensation has already been paid, the employee must receive additional overtime pay for each overtime hour in the week at not less than one-half this regular rate
  10. 10. Example of Chinese Overtime • If an employee is paid a salary of $1,000.00 per week on a fluctuating workweek basis and works 45 hours one week, their overtime pay for the week is calculated as: ▫ $1,000/45 hours = $22.22 regular rate • Since the salary covers all 45 hours worked at straight time, they are due half-time pay for the 5 hours worked over 40: ▫ $22.22/2 = $11.11 x 5 hours = $55.56
  11. 11. How to Use the Chinese Overtime Method • The employee must have a work schedule with fluctuating hours ▫ They cannot be on a fixed schedule • Employees must be paid a fixed salary that is meant to be straight- time compensation for all hours worked in a workweek, whether the employee works less than or more than 40 hours per week • With almost no exceptions, no reduction in the salary may be made for short workweeks • The salary must be large enough to ensure that the regular rate will never drop below minimum wage
  12. 12. Conclusion • Federal and state labor laws on overtime place the responsibility for properly classifying workers as either exempt or non-exempt solely on the employer • If workers are not informed and aware of their rights, they cannot take steps to effectively stop illegal pay practices that may deny them the overtime pay them are entitled to receive • A private wage and hour lawyer, state workforce commissions, and the US Department of Labor can provide additional resources to help employees become aware of and better understand their rights