Employees, particularly those who work more than 40 hours a week, should be aware of whether they are an exempt or non-exempt employee under overtime law. Exempt and non-exempt status determines whether an employee is eligible to receive time-and-a-half compensation when working more than 40 hours a week. An exempt employee cannot receive overtime, while a non-exempt worker is entitled to overtime pay. Because many employers may be confused by overtime law, employees who are aware of their status can ensure they are receiving the pay they are entitled to under overtime law.
For most employees, overtime eligibility is determined by how much the employee is paid, how they are paid and their job duties. Being paid by a salary or having a certain job title cannot automatically make an employee ineligible for overtime pay. In general, employees who cannot collect overtime must receive at least $455 per week, be paid by a salary and meet one of the overtime exemptions established by the federal overtime law, the Fair Labor Standards Act (FLSA). The three main exemptions under the FLSA are the administrative exemption, executive exemption and professional exemption. Individuals who do not meet one of the following exemptions are probably eligible for overtime pay.
1. Administrative Exemption
To fall into the administrative exemption, the employee must perform office or non-manual work or work in school administration. Administrative employees must also regularly exercise discretion and independent judgment in important matters. For instance, planners and department store buyers may be examples of administrative employees. Although clerical work is considered “administrative”, most secretaries are entitled to overtime pay. Filing, answering phone calls, gathering reports and making travel plans are not considered high-level job tasks. Therefore, secretaries performing these job tasks do not meet the provisions of the administrative exemption. Additionally, although many secretaries exercise judgment in their positions, this level of judgment must be compared to the importance of the entire business. For instance, choosing the supplies for the office would not typically be considered an important matter when comparing this job task with those of others in the company.
2. Executive Exemption
To be considered an executive employee, the worker must regularly direct at least two employees, manage the business or a unit of the company, and have the ability to hire and fire employees. If an assistant manager and a manager are always on duty simultaneously, the manager is considered to be the person “in charge.” Therefore, many assistant managers are eligible for overtime pay when working more than 40 hours a week.
3. Professional Exemption
To meet the professional exemption, the employee must carry out a position requiring advanced knowledge in the areas of science or learning. Professional employees typically have a specialized academic degree in their field. An individual whose occupation requires originality and imagination in an artistic or creative field would also fall under the professional exemption. Examples of professional employees include teachers, lawyers and doctors.
In addition to the three main overtime exemptions, those engaged in outside sales (sales made away from the worksite) cannot receive overtime pay. Additionally, some computer employees may be exempt from overtime pay. However, systems engineers, computer operators, junior programmers, and technical writers, as well as computer professionals who make, repair or maintain computer hardware are generally eligible for overtime compensation.