President Obama recently announced his intention to ask the Department of Labor to update aspects of the DOL’s enforcement of the Fair Labor Standards Act, which, in part, dictates which workers qualify for overtime pay.

Even Salaried Workers Must Be Paid Overtime Unless They Are “Exempt”

A popular misconception about overtime pay is that anyone receiving a salary, or any form of compensation other than an hourly wage, is not entitled to overtime compensation. However, the 75 year-old Fair Labor Standards Act (FLSA) does not permit simply labeling an employee as “salaried” to avoid paying them overtime. To escape its obligation to pay overtime wages, an employer must find one of the many FLSA exemptions to fit the job duties and pay of a particular employee. Most popular among these exemptions are the FLSA’s “white collar exemptions” which apply to employees whose job duties are consistent with the FLSA’s test for administrative, executive, or professional employees.

However, in addition to the “duties” test, an employer must show:

1) an employee is paid on a salary basis and
2) the employee’s salary is at least $455 per week.

With regard the “salary basis” test, not all payments which might be commonly considered a salary will pass muster under the FLSA. A salary must compensate an employee for all hours worked, whether few or many. In other words, when an employee works under 40 hours per week, she must be paid the same salary as she is during weeks that they work more than 40 hours per week.

Beyond this, the salary received, currently, must be at least $455 per week. This amount, which comes to just $23,660 per year, has not been increased since 2004. Had this amount been annually adjusted for inflation, it would currently stand at $553 per week or $28,756 annually. It is anticipated that the Obama administration will seek to increase the weekly minimum salary for the white collar exemptions some time this year.

“Duties Test” for White Collar Exemptions May Also Be Narrowed

The Obama administration has also signaled that the duties test applied to the white collar exemptions will also be altered. Currently, many employees, such as low-level managers in fast food restaurants, qualify for the FLSA’s “executive exemption” because they spend some time during their shift managing employees, although they also spend a significant amount of time preparing food and serving customers.

If you are not receiving overtime compensation and do not meet the duties or salary basis test of any of the FLSA’s exemptions, the FLSA allows for recovery of your wages, double damages, as well as attorney’s fees and costs. Because fees and costs can be recovered, these cases are frequently handled on a contingent fee basis, meaning that you will only need to pay attorney’s fees if you recover wages. Hawks Quindel offers a free consultation to anyone who believes they may have a wage and hour claim. Reach us at (608) 257-0040.

David Zoeller

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