What types of employees are entitled to overtime pay?

Q. What types of employees are entitled to overtime pay – which are not?

A. There are two types or categories of employees, exempt and non-exempt. 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 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.

Note that the minimum salary required for the Executive, Administrative, and Professional overtime exemptions changes as of January 1, 2020. The new overtime rule sets the minimum yearly salary for exempt employees at $35,568 or $684 per week, versus the prior salary requirement of $23,600/year or $455 per week. 

While the issue of exemptions can be complicated, the following is a general overview of the primary tests devised by the Department of Labor:


Executive Exemption

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

The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week ($684 per week as of 1/1/20);

The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;

The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and

The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.


Administrative Exemption

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

The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week ($684 per week as of 1/1/20);

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

The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.


Professional Exemption

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

The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week ($684 per week as of 1/1/20);

The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;

The advanced knowledge must be in a field of science or learning; and

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

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

The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week ($684 per week as of 1/1/20);

The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.


Computer Employee Exemption

To qualify for the computer employee exemption, the following tests must be met:

The employee must be compensated either on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week ($684 per week as of 1/1/20) or, if compensated on an hourly basis, at a rate not less than $27.63 an hour;

The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below;

The employee’s primary duty must consist 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 Exemption

To qualify for the outside sales employee exemption, all of the following tests must be met:

The employee’s primary duty must be making sales (as defined in the FLSA), 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

The employee must be customarily and regularly engaged away from the employer’s place or places of business.


Highly Compensated Employees

Highly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 ($107,432 as of 1/1/20) or more (which must include at least $455 per week, $684 per week as of 1/1/20, paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee identified in the standard tests for exemption (see above).


Blue Collar Workers

The exemptions provided for “white collar” employees do not apply to manual laborers or other “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy.  Non-management employees in production, maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers are entitled to minimum wage and overtime premium pay under the FLSA, and are not exempt no matter how highly paid they might be.


Collective Bargaining Agreements

The FLSA provides minimum standards that may be exceeded, but cannot be waived or reduced. Employers may, on their own initiative or under a collective bargaining agreement, provide a higher wage, shorter workweek, or higher overtime premium than provided under the FLSA.

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