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Who Gets Paid For Overtime Work? Why and Why Not?

© Ronald J. Rakowski, SPHR

On the surface, it seems simple enough. The minimum wage and overtime provisons of the Fair Labor Standards Act (FLSA), enacted in 1938, cover hourly and salaried clerical employees who are considered "nonexempt" from FLSA provisions. Managerial/executive, administrative, administrative, outside sales, and professional employees are "exempt" from the minimum wage and overtime provisions of the statute, as are indepemdent contractors. Since 1938, the FLSA salary test for exemption was updated in 1975, the salary basis test was updated in 1948, and the duties test was updated in 1954. Effective July 1, 1972, the FLSA was amended to incorporate the provisions of the Equal Pay Act which apply exempt as well as nonexempt employees.

Under FLSA, nonexempt workers must be paid at least $5.15 for each hour worked and 1.5 times his or regular hourly wage for work in excess of 40 hours per established workweek.

It was once thought that moving from nonexempt to exempt status was a sign of advancement, recognition, and the opening-up of new career horizons. Unfortunately, the hours employees are required to devote to their jobs in today's workplace, especially in high-tech industries, have caused many people to reexamine their FLSA status and clamor for overtime pay. So, let's examine some current overtime basics.

To be considered a manager/executive, a person must spend over 50 percent of his or her time involved with management duties, direct the work of at least two people, have hiring/firing authority, possess discretionary powers, and be paid a minimun of $250 per week. Plus not more than 20% (40% if working in retail) of his or her time can be spent performing nonexempt work.

An administrative employee is one whose primary duty is performing non-manual office work related to management and/or business activities, is paid more than $250 per week, and is able to exercise independent judgment and discretion. Like managers/executives, administrative employees can spend no more than 20% percent (40% if working in retail) of their time performing nonexempt work.

Under FLSA, an outside salesperson is one who sells away from his or her employer's place of business and devotes at least 80% of his or her time to selling activities. Unlike managers/executives, adminstrative employees, and professionals (see below), there is no salary test for outside salespeople.

Professionals are those employees whose work requires advanced knowledge acquired by specialized study or who exercise creativity and originality in performing their jobs. Their work must be varied, not standardized, and they must be able to use discretion and independent judgment. No more than 20% of a professional's time can be spent performing nonexempt work and they must be paid at least $250 per week.

The copyright of the article Who Gets Paid For Overtime Work? Why and Why Not? in Workplace Issues is owned by Ronald J. Rakowski, SPHR. Permission to republish Who Gets Paid For Overtime Work? Why and Why Not? in print or online must be granted by the author in writing.