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Aug23

Overtime for Salaried Employee

I have an employee who works as a General Manager at one of our restaurant/retail locations in one of the Colorado airports. She is salaried at $615 per week. Does she qualify as an employee who is entitled to overtime?

The federal Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.

Under the FLSA, employees are classified as either non-exempt or exempt.

Hourly and salary paid are compensation terms.

Non-exempt employees must be paid for all hours worked and are subject to overtime and minimum wage requirements prescribed by the FLSA. Most employees are considered non-exempt.

Conversely, exempt employees receive a fixed predetermined salary for any week during which work is performed regardless of the quantity or quality of such work. Exempt employees are excluded from overtime pay provisions.

It’s up to employers to determine an employee’s classification based on FLSA guidelines.

To be exempt, an employee must pass all three “tests”, salary level, salary basis, and duties, as outlined by the FLSA.

The salary level test: Employees who are paid less than $455 per week ($913 per week as of December 1, 2016) are non-exempt.

The salary basis test: An exempt employee must receive a regular, predetermined amount of compensation each pay period on a weekly, or less frequent, basis. Aside from a few exceptions, an employee must receive the full salary for any workweek during which the employee performs any work, regardless of the number of days or hours worked.

The duties test: An employee who meets the salary level and salary basis tests is exempt only if he/she also performs exempt job duties. The actual tasks of the job are to be evaluated, not the job title. There are three typical categories of exempt job duties titled executive, professional, and administrative.

Job duties are exempt “executive” job duties if the employee regularly supervises two or more other employees, has management as the primary duty of the position, and has some genuine input into the job status of other employees (such as hiring, firing, promotions, or assignments).

“Professionally” exempt work is predominantly intellectual, requires specialized education, and involves the exercise of discretion and judgment. Advanced degrees are the most common measure of this but are not absolutely necessary if an employee has attained a similar level of advanced education through other means and performs essentially the same kind of work as similar employees who do have advanced degrees.

“Administratively” exempt employees provide support to the operational or production employees and have a major impact on the overall business. An administratively exempt employee has the authority to create or interpret company policies, has responsibilities that directly relate to the overall business operation, has the decision making ability to make significant financial impacts, and has the authority to deviate from company policy without prior approval.

An employee who doesn’t pass all three tests is considered non-exempt under the FLSA.

Since the General Manager is paid $615 per week on a salary basis and assuming she performs exempt job duties as previously mentioned then she qualifies for exempt status. Exempt employees are not required to receive overtime pay. Remember, come December 1st she will have to earn at least $913 per week to meet the salary level requirement. Otherwise, her classification must change to non-exempt and she will be eligible for overtime pay.

HTH!

This entry was posted on Tuesday, August 23rd, 2016 at 11:48 am and is filed under
Compensation.
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