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Salary & Overtime FAQs

If you are paid on a salary basis, you should receive the same amount of pay for each week that you work regardless of the number of days or hours you work. In other words, if you are paid on a salary basis, and your weekly salary is $500 per week, and you work five fewer hours that week, you are still entitled to receive your usual $500 in wages.

Too often, we hear clients tell us that their employers say that if they are paid a salary, they are not entitled to receive overtime pay. However, this is not necessarily true. The way an employee is paid does not actually determine their right to overtime pay. In reality, even if you were told that you would be paid a certain salary regardless of how much you work, you could still be entitled to overtime pay.

It is an employee’s job duties that determine if they are exempt from the overtime rules. While some salaried positions may be exempt from overtime, the job position must meet specific exemption criteria for the position not to be permitted to overtime pay.

What are the Most Common Overtime Exemptions?

The three most common overtime exemptions that entitle an employee to be paid overtime if they are on a salary basis are:

Executive Exemption

To qualify for executive exemption, you must meet all of the following requirements:

  • The employee must be compensated on a salary basis at a rate of at least $684 per week.
  • The employee’s primary duty must manage the enterprise or manage a customarily recognized department or subdivision of the enterprise.
  • The employee must regularly direct the work of at least two or more other full-time employees or their equivalent.
  • The employee must have the authority to hire or fire other employees or recommend hiring, firing, advancement, promotion or any other change of status of other employees.

Administrative Exemption

To qualify for the administrative employee exemption, all of the following factors must be met:

  • The employee must be compensated on a salary or fee basis at a rate of at least $684 per week.
  • 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.
  • The employee’s primary duty includes exercising discretion and independent judgment with respect to matters of significance.

Learned Professional Exemption

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

  • The employee must be compensated on a salary or fee basis at a rate of at least $684 per week.
  • The employee’s primary duty must be the performance of predominantly intellectual work, which includes work that requires the regular exercise of discretion and judgment.
  • The employee must have advanced knowledge in a field of science or learning.
  • The employee’s advanced knowledge must be acquired by a prolonged course of specialized intellectual instruction.

If you are paid on a salary basis but do not have the job duties listed under one of these exemptions, you are likely a non-exempt salaried employee ­– permitting you to overtime pay.

How is Overtime Calculated Under Different Salary Pay Structures?

Employees who are paid a fixed salary for a workweek longer than 40 hours are still entitled to overtime pay unless their position is exempt. For example, if an employee is hired to work a 45-hour workweek for $500 per week, the regular rate is calculated as: $500/45 hours = $11.11. Since the salary is deemed to compensate the employee at straight time for all hours worked, the employee is due half-time pay for hours worked over 40: $11.11/2 x 5 = $27.77

However, in fixed salary for fluctuating hours pay structures, the regular rate of an employee varies from week to week. The regular rate is determined each week by dividing the salary by the number of hours worked and 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 worked in the week at one-half this regular rate.

In other words, if an employee is paid a salary of $500.00 per week on a fluctuating workweek basis and they work 45 hours one week, their overtime pay is calculated as: $500/45 hours = $11.11 regular rate. Since their salary covers all hours worked at straight time, they are due half-time pay for hours worked over 40: $11.11 / 2 = $5.56 x 5 hours = $27.78.

For the fixed salary for fluctuating hours method to be valid:

  • the employee must have a work schedule with fluctuating hours
  • the employee must be paid a fixed salary that is meant to be straight-time compensation for all hours worked in a workweek
  • 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

In May 2020, the Department of Labor issued a new rule loosening the restrictions on employers’ use of the fluctuating workweek method to calculate overtime pay for non-exempt salaried employees. Since this method results in employees getting less overtime pay, workers’ rights advocates did not want to encourage more employers to use the fluctuating workweek method. The new rule allows employers to pay additional compensation based on the number of hours worked, such as bonuses, premium pay, or differential pay, in addition to paying a fixed salary and still take advantage of the fluctuating workweek method.

If You Believe You Could Be Missing Overtime Pay, Contact an Experienced Workers’ Rights Attorney

At Lore Law Firm, we represent workers across the United States and help them recover the overtime pay to which they are entitled. We work on a contingency fee basis, meaning you don’t pay us anything unless we successfully recover payment for you. Call us today at 866-559-0400 or complete our contact form to speak with a workers’ rights attorney and discuss your case.

Frequently Asked Questions About Salary and Overtime in Texas

I think I’m owed overtime pay, what should I do?

If you think your employer has cheated you out of overtime pay, you should act promptly to learn about and protect your rights because strict time limits apply to any claim for unpaid wages you may have. Do not rely on what you have been told by coworkers, HR or your boss – get information from a reliable resource such as the Department of Labor or an employment attorney who handles claims for unpaid overtime.

How can I calculate what my overtime pay should be?

Calculating how much you should be paid for overtime can vary depending on how you are paid. You can use the overtime pay calculator provided here. The basic calculation is Regular Rate x 1.5 = Overtime Pay Rate x Number of Overtime Hours = Overtime Pay Due. If you are paid hourly (with no other incentives, differentials or bonuses), the regular rate calculation is merely your normal hourly rate multiplied by 1.5. If you are paid a salary, day-rate, piece-rate or you receive incentives, differentials or bonus payments, the regular rate must be calculated differently – and the process becomes a bit more complex.

How do I prove the amount of time spent working overtime?

First, it is important to know that the Supreme Court addressed this issue in the 1940s and stated that it’s the employer’s burden to keep records of hours worked – not the employee’s. Where the employer has no records, or where those records are inaccurate or inadequate, the employee is allowed to prove the amount of time spent working overtime by “just and reasonable inference” – meaning, they are able to use their best recollection and other evidence to estimate how much overtime they worked.

If I am paid on a salary basis, can I still earn overtime?

Yes. Even if you are paid a salary, you can be non-exempt and entitled to overtime pay. This typically occurs when either your job duties do not meet the requirements for an exemption or your salary is not high enough to meet the minimum salary level for overtime exemption. For example, a construction worker or oil field operator can be paid on a salary basis, and even if the amount of their salary exceeds the legal minimum, their actual job duties would not qualify them for an exemption – so, they are still able to earn overtime pay despite being paid a salary.

What is the difference between exempt and nonexempt employees?

Exempt employees are those who, due to their job duties and compensation, 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 or whose compensation does not meet the legal requirements 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. The current minimum salary required for the Executive, Administrative, and Professional overtime exemptions is $35,568 per year or $684 per week.