Although most employers are fair and great to work for, during your career, you may run across an immoral one who tries to cheat you by claiming you are not owed overtime pay. It is often intimidating to stand up for yourself when power is unequal. We can stand up for you, review your situation, and advise you without alerting your boss until we are convinced you are owed money.
One confusing aspect of overtime pay concerns contract employees, who are often mistaken for independent contractors. With some exemptions, one is entitled to overtime, and the other is not. Understanding your employee status is in your best interest, so you are paid what you have earned.
What a Contract Employee Is and Is Not
If you are a contract employee, it often means a third-party recruitment agency placed you at their client’s company because the business needed your skills temporarily. You are still an employee who should receive a W-2; however, it is usually issued by the staffing company, not the payroll department of the business the recruiter arranged.
Contract employees can easily be confused with independent contractors, who receive 1099s, pay their own taxes, determine how they want to complete the job they agreed to do as an independent contractor, use their own tools, and are not required to be paid overtime.
Overtime Pay
The federal Fair Labor Standards Act (FLSA) sets the rules for what overtime pay is and who is entitled to collect it. Currently, the federal minimum wage is $7.25 an hour. However, all states have their own minimum wage laws, and employers are required to pay the higher of the two minimums. For instance, Georgia’s minimum wage is $5.15 an hour, so employees in that state generally must be paid the higher federal minimum of $7.25. Nevada will raise its minimum wage in July 2025 to $12.00 per hour, which all employers in the state must pay because it’s higher than the federal minimum.
The FLSA requires non-exempt employees, whether regular or contract, to be paid one and a half times their hourly wage for all hours worked over 40 in a week. However, state laws vary, with California requiring employers to pay time and a half for all hours worked over eight in a workday.
Contract Employees Can be Exempt from Overtime Under the FLSA
Just like employees who are hired directly by a company, the general rule is that most workers are non-exempt and entitled to overtime pay. However, some contract employees are exempt from being paid overtime. To be exempt, the positions must qualify for the executive, administrative, professional, computer employee or other specific exemptions to the overtime laws. These exemptions require both minimum pay levels and specific job duties. You are eligible for overtime if your salary is less than $684 per week ($844 per week after July 1, 2024) or an hourly rate for computer employees of at least $27.63 per hour. On January 1, 2025, most salaried employees, including contract employees, are eligible for overtime if they make less than $1,128 per week.
To be exempt from overtime as a contract executive, the employee must:
- Manage the employer’s business or a department of it
- Oversee at least two full-time employees
- Have the ability to hire and fire other employees
For more information on exemption requirements for executives, admin, and other professionals, click here. Administrative employees are exempt from overtime if their main objective is to manage the business. Professionals’ jobs require advanced knowledge in which they must be certified, such as medicine or law, or the exemption can be for creative professionals who are inventive and talented in the arts.
Let Our Attorneys Review Your Circumstances
Does it sound like you are being shorted overtime pay you earned because someone has told you that you are exempt or are an independent contractor when you are a contract employee? It doesn’t cost you anything to get our free and confidential review. Learn how we can help you, no matter where you live.
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