Overtime Exemption – Does Your Employee Qualify?
As you may have already learned, the Department of Labor has finally rolled out a new revision of the Fair Labor Standards Act, raising the minimum salary required for overtime pay exemption. Is your salaried employee eligible to be exempt? Read about the new FLSA rules and job duties requirements that must be met before a employee can be considered exempt from overtime pay rules.
The Fair Labor Standard Act requires that employers pay their employees at least the federal minimum wage per hour, and an additional pay of at least 1.5.times their regular wage for each hour worked after 40 hours in a work week. These rules do not apply if an employee has ‘exempt’ status. which carries specific eligibility requirements, including fixed minimum salary levels independent of hours worked, and the performance of specific job duties.
It has been 15 years since the last time the FLSA was amended and many have anxiously been waiting for the new amendment to be available to the public. On September 24, 2019 the Department of Labor announced a new minimum salary threshold that must be met before an employee can be classified as exempt from overtime pay rules; from a minimum salary of $455 per week to $684 per week.
Under this new FLSA rules, 1.3 million employees will be eligible for exemption status. The changes go into effect on January 1, 2020
The Fair Labor Standard Act allows exemption for employees that are employed as Executive, Professional or Administrative Employees as long as the employee meets all the requirements needed in order to qualify.
Here, we’re going to focus on what qualifies an employee to be considered Executive Employee. Below is a list of those qualifications that must be met in order for said employee to be exempt:
- Employees must be paid the minimum salary of $684 per week.
- Employee must hold a higher position in a department and able to hire and fire employees.
- Employee must have two or more employees under him whom report to him/her and take guidance and directions from said employee.
Next, we’re going to look at what qualification requirements must be met in order to be classified as an Administrative employee and be eligible for exemption. Those qualifications are as follows:
- Employee must be paid on a salary basis of course. And amount of salary must be at least $684 per week.
- Employee must do office work that are not manual.
- Employee must have the authority to make decisions or evaluations independently.
The following is a list of requirements that must be met in order for an employee to qualify as Professional employee, who is eligible for overtime exemption:
- As with all other eligible positions, the employee has to be paid on a salary basis, at the minimum of $684 per week
- Employee’s primary job duty has to be intellectual in nature and requiring above average knowledge to perform
- In most cases the employee’s knowledge must be something they acquired from a specialized course of intellectual study in the ‘fields of science or learning’, sometimes combined with equivalent work experience.
- Employee day to day duties require the authority to make independent decisions and judgement calls
The name says it all. Creative Employees are, well…just that. Aside from having to earn the $684 or more weekly salary, their job must prioritize creativity. Such as, work that requires imagination, invention and artistic skill or talent.
Some other types of employees that can qualify for overtime exemption under specific rules are: Computer Employee, Outside Sales Employee, Highly Compensated Employees and certain Blue-Collar Workers. Download our new infographic for details on other positions eligible for overtime pay exemption.
Diligent Screening recommends that employers consult with an employment law attorney when considering exemption from wage laws, as the DOL has established that “The employer bears the burden of establishing the applicability of any exemption from the FLSA’s pay requirements. Job titles, job descriptions, or the payment of a salary instead of an hourly rate are insufficient, standing alone, to confer exempt status on an employee.” (https://www.federalregister.gov/documents/)
NOTE: Diligent Screening Services does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational/informational purposes only. We recommend you consult your attorney or legal department if you want assurance that our information, and your interpretation of it, is appropriate to your particular situation.
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