Under the Fair Labor Standards Act (FLSA), employees employees who work more than forty hours per week are entitled to overtime pay. Overtime pay is defined as one-and-one-half times the rate of the employee’s regular pay rate. Violations of overtime labor laws include the failure to include non-discretionary bonuses in the overtime calculation, misclassifying employees as exempt from overtime, and the failure to pay employees for the time that the employee actually works over the forty hour workweek. However there are exempt employees from this rule.
Section 13(a)(1) of the FLSA details exemptions from overtime pay for employees who are outside sales employees, professionals, administrative and/or executive. To qualify for an exemption from the overtime requirements, the employee must generally pass two tests: the salary basis test and the duties test.
The salary test is generally satisfied if the employee is paid a fixed salary without deductions from the salary for quality or quantity of the work. The duties test is me by the actual work being done and is different for administrative, professional and outside salespersons.
To be exempt as an administrative employee, the employee must:
1) have as a primary duty office or non-manual work directly related to general business operations or management policies, or perform work in educational administration.
2) be customarily and regularly in a position to exercise independent judgment
3) regularly assist executive or administrative employees
4) spend no more than 20 percent of the employee’s time not related to the above-mentioned activities
5)be a salaried employee.
To be exempt as an executive employee, the employee must:
1) Customarily and regularly direct the work of two or more other full-time employees;
2) have a primary duty that includes management
3) have authority to hire and fire employees
4) customarily and regularly exercise discretion
5) spend at least 80 percent of the employees time on the above referenced activities
6) be a salaried employee
To be exempt as a professional employee, the employee mus:
1) have as part of the employee’s primary duties a requirement of: advanced knowledge customarily received through advanced education; originality in recognized artistic field; teaching; or highly specialized computer skills
2) consistently exercise discretion
3) perform work that is intellectual and varied
4) Spend at least 80% of the employee’s time on the above-referenced tasks
5) Be a salaried employee
To be exempt as an outside salesperson, the employee must spend approximately 80 percent of their time dedicated to obtaining orders away from the place of business. Hours worked in the office targeted toward obtaining sales count’s toward the 80 percent threshold.
At Gana Weinstein LLP, we represent employers and employees in prosecuting and defending actions for unpaid overtime. If you need advice on whether you have a claim or how to defend a claim, give us a call.