Overtime Wages for Non-Exempt Employees

Q. Are all employees entitled to overtime pay? And, if not, who isn’t?

A. Exempt and non-exempt employees are the two categories of employees. 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. Overtime wages for non-exempt employees or those whose job duties do not fit within any of the exemptions provided for under the Fair Labor Standards Act and are, therefore, entitled to overtime pay.

The list of exemptions under the Fair Labor Standards Act are very narrow, and it is up to the employer to prove that any of their employees are indeed not exempt.

To better understand overtime wages for non-exempt employees, here is a list of the normal tests developed by the Department of Labor:

Executive Exemption

If all of the tests below are met, you may qualify for the executive employee exemption.

An employee has to be paid on a salary basis (as defined in the regulations) at a rate that exceeds $455* ($684 as of 1/1/20) per week;

The employee’s main duty must be managing the enterprise, or managing a ordinarily recognized branch or subdivision of the enterprise;

An employee must routinely and customarily direct the workload of at least two employees who work full time (or the part-time equivalent); and

An employee must have the capability to hire or fire other workers, or the particular’s employee’s input must be given particular weight, when it comes to hiring, firing, promoting, or changing the status of other employees.

* The Department of Labor under the Obama Administration increased this salary amount to $913 per week effective 12/1/2016; however, this increase was blocked by a court ruling. Instead, the Trump Administration only increased the salary amount to $684 per week effective 1/1/2020. Please see this page for the latest updates.

Administrative Exemption

If you believe you may qualify for the administrative employee exemption, you must meet the following tests:

An employee will have to be paid on a salary or fee basis (as stated in the regulations) at a sum that is no less than $455* ($684 as of 1/1/20) weekly.

The employee’s primary duty must be 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

An employee’s main responsibility has to be the performance of non-manual work, which is related to the general business operations of the business or the employer’s customers; and

The exercise of independent judgment and discretion, when it comes to business related manners, must be one of the primary duties of the employee.

Professional Exemption

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

The compensation of an employee must come through a salary or fee basis – which is defined in the regulations – that is more than $455* ($684 as of 1/1/20) per week;

Work which requires a particular knowledge, or work that is defined as mainly intellectual in character that requires the exercise of judgment and discretion must be one of the primary duties of the employees.

The advanced knowledge that was mentioned above must come from a learning or science origin; also, the knowledge must be obtained from a course or specialized intellectual instruction.

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

All of the following tests must be met, to qualify for the creative professional employee exemption:

An employee must also be compensated on a fee or salary basis (as described in the regulations) as a rate that pays more than $455* per week;

Work requiring invention, imagination, talent or originality in a field that is recognized for its artistic or creative endeavor must be part of the main duties for an employee.

Computer Employee Exemption

The following tests will have to be met for any computer employee to qualify for the computer employee exemption:

An employee has to be compensated on a fee or salary basis (as stated in the regulations) at a rate that exceeds $455* ($684 as of 1/1/20) per week or, if they are paid on an hourly basis, they must receive more than $27.63 an hour;

The employee has to work as a computer programmer, computer systems analyst, software engineer or worker that is required to have similar skills in the computer field who performs the duties listed below:

The employee’s main duty must consist of:

1) The application of systems analysis procedures and techniques, which includes discussions with users, to determine hardware, system functional or software 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 documentation, analysis, testing, modification, creation or design of computer programs or systems, which includes prototypes, related to and based on system or user design specifications;

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

Outside Sales Exemption

All of the criteria listed below must be met to qualify for the outside sales exemption:

Making sales must be the primary duty of the employee (as defined in the Fair Labor Standards Act), or gathering contracts or orders for services for the use of facilities for which a consideration must be paid by the customer or client; and

It must be customary for the employee to be regularly working away from the employer’s places or place of business.

Highly Compensated Employees

Employees that are highly compensated for non-manual or office related work that annually bring in a salary of $100,000 ($107,432 as of 1/1/20) or more (which has to amount to more than $455* ($684 as of 1/1/20) per week paid on a fee or salary basis) will be exempt from the Fair Labor Standards Act if they regularly or customarily fulfill the duties of an exempt executive, professional or administrative employee who is identified in the standard tests for exemptions (see above).

Blue Collar Workers

The same exemptions that are offed to “white collar” employees will not apply to “blue collar” or manual workers whose work involves repetitive operation involving the hands, physical skill and energy. Carpenters, electricians, plumbers, iron workers, construction workers and other non-management employees are entitled to minimum wage and overtime premium pay, in accordance with the FLSA and overtime wage laws, and are not exempt no matter how much they may be paid.

Collective Bargaining Agreements

There are minimum standards under the Fair Labor Standards Act that may be exceeded, but can’t be reduced or waived. However, employers may, on their own accord or under a collective bargaining agreement, diced to provide a higher wage, shorter workweek, or even a higher premium for overtime than the one provided under the FLSA.

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Overtime Wages for Non-Exempt Employees

Q. Are all employees entitled to overtime pay? And, if not, who isn’t?

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