One of the first questions I ask during an initial consultation with a potential client is whether he or she earns overtime pay for working more than 40 hours per week. One of the most common answers I hear to this question is “I’m salaried, I’m not entitled to overtime.” While it’s true that some employees who earn a salary are exempt from overtime (like lawyers, for instance), other employees must be paid overtime even if they receive a salary because they do not meet the requirements to be exempt from overtime pay. In other words, being paid a salary does not necessarily mean you are not entitled to overtime pay for hours worked over 40 in a week.
There are some basic rules for salaried employees and an employer’s failure to follow them may mean the employee has a claim for back overtime pay.
(1) Salaried employees must be classified under one of the white collar exemptions – administrative, professional, or executive (i.e. you can’t be a salaried factory worker or receptionist). There are different rules for outside sales employees and certain technology employees.
(2) Salaried employees must make a minimum salary of not less than $455 per week. If the employer pays the employee less than $455 per week, the employee is not paid on a “salary basis”, and therefore, the employee is not exempt and must be paid overtime.
(3) Salaried employees must receive the predetermined amount of compensation each pay period and the predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work.
(4) If the employer makes deductions from an employee’s predetermined salary, i.e., because of the operating requirements of the business, that employee is not paid on a “salary basis” and therefore the employee is not exempt and must be paid overtime.
An employer is entitled to make certain deductions even if the employee is salaried, under the following circumstances:
(1) The employee is absent from work for one or more full days for personal reasons other than sickness or disability;
(2) For absences of one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness;
(3) To offset amounts employees receive as jury or witness fees, or for military pay;
(4) For penalties imposed in good faith for infractions of safety rules of major significance;
(5) For unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions.
If your employer is not in compliance with the above rules or if you or someone you know has a question about salary pay or other wage issues, contact Hawks Quindel, S.C. for a free consultation.
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