Overtime Pay Laws for Customer Service Reps

Customer Service Representatives and Call Center Employees are often misclassified as exempt from the overtime regulations under the Administrative Exemption. Due to this misclassification, these employees often work more than 40 hours per week, with no additional compensation other than their salary.

In addition, these types of employees are often not paid for all the time they work. Many employers require employees to boot up their computer, log into computer systems, record notes, review company policies, procedures and services, and doing clerical work without recording this as time worked. This “off the clock” time often results in the employee working more than 40 hours per week.

Recently companies such as Sprint and APAC Customer Services settled wage and hour class actions suits alleging that they forced employees to work off the clock and, therefore, did not pay their employees for all time worked, including overtime, as required by the Fair Labor Standards Act.

Administrative Exemption

In order for Customer Service Reps and Call Center Employees to be administratively exempt:

  • They must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455* per week (Update: $684/week as of 1/1/2020);
  • Their 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
  • Their primary duty must include the exercise of discretion and independent judgment with respect to matters of significance

* 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. The Trump Administration has instead only increased the minimum salary to $684 per week, effective 1/1/2020. The prior salary limit was $455/week.  Please see this page for the latest updates.

In order to qualify for the exemption, the employee’s work must be directly related to assisting with the running or servicing of the business. This type of work would include work in accounting, advertising and marketing, personnel management, human resources, labor relations, research, quality control or other similar activities.

In addition, the employee’s duty must include the exercise of discretion and independent judgment. Generally, this means that the employee has the authority to make an independent choice free from immediate direction or supervision. For example, the employee has the authority to make or implement management policies, the employee performs work that substantially affects the business operations, the employee has the authority to commit the employer in matters with significant financial impact, or the employee can deviate from established policies without prior approval. The level of importance or consequence of the work will determine whether it is a matter of significance.

Commissioned Sales

If a Customer Service Rep or Call Center Employee is paid commissions, they may be exempt as commissioned employees.

In order to fall under this exemption:

  1. the employee must be employed by a retail or service establishment, and
  2. the employee’s regular rate of pay must exceed one and one-half times the applicable minimum wage for every hour worked in a workweek in which overtime hours are worked, and
  3. more than half the employee’s total earnings in a representative period must consist of commissions.

Unless all three of these requirements are met, the employee must be paid overtime if they work more than 40 hours per week. If you are a Customer Service Rep or Call Center Employee and you feel you have been misclassified as exempt and denied your overtime pay, please Chat with us for a Free & Confidential Review of your situation.