Overtime Qualification and Exemption FAQs

What types of employees are entitled to overtime pay?

There are two types or categories of employees, exempt and non-exempt. Exempt employees are those who, due to their job duties, are not legally entitled to overtime and are, therefore, “exempt” from the laws regarding overtime pay. Non-exempt employees are those whose job duties do not fit within any of the exemptions provided for under the FLSA and are, therefore, entitled to overtime pay.

The exemptions provided for under the FLSA are very limited and narrow, and the burden is placed on the employer to prove that any given employee or class of employees is not exempt.

While the issue of exemptions can be complicated, the following is a general overview of the primary tests devised by the Department of Labor:

Executive Exemption

To qualify for the executive employee exemption, all of the following tests must be met:

The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455* ($684 as of 1/1/2020) per week;

The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;

The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and

The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

*Note: The Obama Administration increased the minimum “exempt” salary amount to $47,476 effective 12/1/16 but the increase was blocked by a court ruling. Instead, the Trump Administration only increased the minimum “exempt” salary to $35,568 per year as of 1/1/2020. Please see this page for the latest updates.

Professional Exemption

To qualify for the learned professional employee exemption, all of the following tests must be met:

The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455* ($684 as of 1/1/2020) per week;

The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;

The advanced knowledge must be in a field of science or learning; and

The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

To qualify for the creative professional employee exemption, all of the following tests must be met:

The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455* ($684 as of 1/1/2020) per week;

The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

Computer Employee Exemption

To qualify for the computer employee exemption, the following tests must be met:

The employee must be compensated either on a salary or fee basis (as defined in the regulations) at a rate not less than $455* ($684 as of 1/1/2020) per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour;

The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below;

The employee’s primary duty must consist of:

1) The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;

2) The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;

3) The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or

4) A combination of the aforementioned duties, the performance of which requires the same level of skills.

Outside Sales Exemption

To qualify for the outside sales employee exemption, all of the following tests must be met:

The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and

The employee must be customarily and regularly engaged away from the employer’s place or places of business.

Highly Compensated Employees

Highly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 ($107,432 as of 1/1/2020) or more (which must include at least $455* ($684 as of 1/1/2020) per week paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee identified in the standard tests for exemption (see above).

Blue Collar Workers

The exemptions provided for “white collar” employees do not apply to manual laborers or other “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy. Non-management employees in production, maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers are entitled to minimum wage and overtime premium pay under the FLSA, and are not exempt no matter how highly paid they might be.

Collective Bargaining Agreements

The FLSA provides minimum standards that may be exceeded, but cannot be waived or reduced. Employers may, on their own initiative or under a collective bargaining agreement, provide a higher wage, shorter workweek, or higher overtime premium than provided under the FLSA.

Collective Bargaining Agreements

Learn more about mandatory overtime here.

Can my employer make a ‘different deal’ with me for overtime?

In almost all cases no. Employers and employees who are covered by the FLSA are not free to bargain for either a wage that is below the minimum wage, or for work in excess of 40 hours per week without paying a premium (typically time and a half) for overtime hours. Many employers wrongly believe that they can”cut a deal” with employees to avoid paying overtime rates – they cannot.

What if I didn’t get permission or ask for the time I worked?

In most cases, failure to ask is not a defense for an employer in an FLSA case.

What if I get”Comp Time” instead of overtime pay?

The granting of comp time instead of paying for overtime is not generally permitted, unless you work for the government.

What if I agreed to work for a ‘flat salary’?

If an employee is covered by the FLSA, and most are, an employer cannot disregard an employee’s overtime hours even if the employee agreed to work for a fixed amount of pay, regardless of the number of hours actually worked. While the method of calculating the overtime due to the employee may vary, the employee is entitled to overtime pay for all hours over 40 worked during any given work week.

What is”Chinese Overtime”?

Learn about Chinese Overtime here.

What if I am a tipped employee?

If an employer elects to use the tip credit provision, it must inform the employee in advance and must be able to show that the employee receives at least the minimum wage when direct wages and the tip credit allowance are combined. If an employee’s tips combined with the employer’s direct wages do not equal the minimum hourly wage, the employer must make up the difference.

Employees must retain all of their tips, except to the extent that they participate in a valid tip pooling or sharing arrangement. A tip pool can often be invalidated if tips are shared with managers, dishwashers, cooks, chefs or others who are not entitled to share in tips.

What if I am an ‘independent contractor’?

Learn more about overtime pay as an ‘independent contractor’ here.

What if I get a ‘bonus’ instead of overtime?

While some employers may offer to compensate employees for overtime work by paying some type of a bonus for overtime work, this type of arrangement is not generally permitted by law.

What if I didn’t report or ask for my overtime?

It probably does not matter. It is the employer’s obligation to control and document your work. If the employer does not want work to be done it must prohibit it. Failure to ask for overtime is usually not a defense, unless the employer has a requirement and/or policy that all time be reported and actually enforces it, or if an employee’s failure to report or ask means that the employer did not know (or have reason to know) work was being done.

Am I entitled to overtime?…and other common questions

Overtime Qualification and Exemption FAQs

Confidential