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The Fair Labor Standards Act and Overtime Pay Rules

Overtime Rules imageThe Fair Labor Standards Act establishes minimum wage, overtime pay, record keeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. The rules and regulations established by Fair Labor Standards Act, and complicated by differing state laws and regulations makes it sometimes very difficult to understand. We make it our business to know the intricacies of the laws involved and how they affect you and your employment. If you have any questions regarding your own situation, please send your background information and/or question using the online form in the sidebar on the right.

AN OVERVIEW OF FLSA FAIRPAY OVERTIME RULES

MINIMUM WAGE INCREASE:overtime rules image The FLSA was amended to increase the federal minimum wage in three steps: to $5.85 per hour effective July 24, 2007; to $6.55 per hour effective July 24, 2008; and to $7.25 per hour effective July 24, 2009. Many states also have minimum wage laws. Where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher minimum wage rate. Individual states have increasingly implemented minimum wage regulations that require a higher wage than under federal law. Such states include:
  • California – Currently has a minimum wage of $8.00 per hour with planned increases to $9.00 on 6/1/14 and $10.00 on 1/1/16
  • Arizona – Current minimum wage set at $7.90 per hour
  • Colorado – Current minimum wage set at $8.00 per hour
  • Montana – Current minimum wage set at $7.90 per hour
  • Washington – Currently has the highest minimum wage of any state at $9.32 per hour
  • Oregon – Current minimum wage set at $9.10 per hour
  • Vermont – Current minimum wage set at $8.73 per hour
  • Connecticut – Current minimum wage set at $8.70 per hour
  • Illinois – Current minimum wage set at $8.25 per hour
  • Nevada – Current minimum wage set at $8.25 per hour
  • Massachusetts – Current minimum wage set at $8.00 per hour
  • New York – Current minimum wage set at $8.00 per hour
  • New Jersey – Current minimum wage set at $8.25 per hour
  • Ohio – Current minimum wage set at $7.95 per hour
  • Florida – Current minimum wage set at $7.93 per hour
FAIR PAY RULES: The Department of Labor (DOL) released the “FairPay” rules that went into effect on August 23, 2004. These FairPay overtime laws make some significant changes to the old rules and are intended to strengthen overtime protections and overtime rights for 6.7 million American workers, including 1.3 million low-wage workers who were denied overtime under the old rules. Under the new FairPay rules, workers earning less than $23,660 per year or $455 per week are guaranteed overtime protection. As before, mere job titles do not determine an employee’s exempt or non-exempt status and entitlement to overtime pay. Under the new overtime rules, certain workers are automatically eligible for overtime pay regardless of how much they earn. The following categories or classes of workers are automatically eligible for overtime pay regardless of how much they earn:
  • “Blue collar” workers or other manual laborers who perform work involving repetitive operations with their hands, physical skill and energy
  • Police officers, fire fighters, paramedics and other “first responders”
  • Licensed practical nurses
  • Paralegals
The DOL chart below provides a side-by-side comparison of the applicable tests for Executive, Administrative, Professional, Computer and Outside Sales employees under the old overtime rules and the new overtime rules and FairPay overtime law regulations:  

Executive Employees

  Short Test before 08/23/2004 Standard Test Effective 08/23/2004
Salary Level

$250 per week
$455 per week $455 per
Duties

Whose primary duty consists of the management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof; and

Includes the customary and regular direction of the work of two or more other employees therein.  

Whose primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;

Who customarily and regularly directs the work of two or more other employees; and

Who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.
  Administrative Employees
  Short Test Before 08/23/2004 Standard Test Effective 08/23/2004
Salary Level

$250 per week
$455 per week $455 per
Duties

Whose primary duty consists of the performance of office or non-manual work directly related to management policies or general business operations of the employer or the employer’s customers; and

Which includes work requiring the exercise of discretion and independent judgment.  

Whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
  Professional Employees
  Short Test Before 08/23/2004 Standard Test Effective 08/23/2004
Salary Level

$250 per week
$455 per week $455 per
Duties

Whose primary duty consists of the performance of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study; and

Which includes work requiring the consistent exercise of discretion and judgment; or

Whose primary duty consists of the performance of work requiring invention, imagination, or talent in a recognized field of artistic endeavor.  

Whose primary duty is the performance of work requiring knowledge of an advanced type (defined as work which is predominantly intellectual in character, and which includes work requiring the consistent exercise of discretion and judgment) in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction; or

Whose primary duty is the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
  Computer Employees
  Short Test Before 08/23/2004 Standard Test Effective 08/23/2004
Salary Level

$250 per week or, if paid hourly, 6 ½ x $4.25 (i.e., $27.63 an hour)
$455 per week or $27.63 an hour
Duties

According to FLSA overtime rules, the primary duty must be performing work that requires theoretical and practical application of highly-specialized knowledge in computer systems analysis, programming, and software engineering, and the worker must be employed and engaged in these activities as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer software field, as provided in § 541.303, which includes work requiring the consistent exercise of discretion and judgment.

§ 541.303(b): Whose primary duty consists of one or more of the following: (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.  

Computer systems analysts, computer programmers, software engineers or other similarly skilled workers in the computer field are eligible for exemption, but only if the employee’s primary duty consists 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 Employees
  Short Test Before 08/23/2004 Standard Test Effective 08/23/2004
Salary Level

No minimum salary required

No minimum salary required
Duties

Who is employed for the purpose of and who is customarily and regularly engaged away from the employer’s place or places of business in making sales; 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

Who does not devote more than 20 percent of the hours worked in the workweek by nonexempt employees of the employer to activities that are not incidental to and in conjunction with the employee’s own outside sales or solicitations.  

Whose primary duty is making sales 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

Who is customarily and regularly engaged away from the employer’s place or places of business in performing such primary duty.  
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