FLSA Basics

I.          Misclassification as Exempt Under the federal Fair Labor Standards Act ("FLSA") some employees are exempt from receiving (or are not entitled to) overtime pay.

However, unless you qualify for one of the overtime exemptions, it is likely your employer should be paying you one-and-one half times your regular rate of pay for any hours you work in excess of forty hours per work week.  If you work more than forty hours per work week but do not receive overtime pay, and you do not qualify for any of the following exemptions, you may be misclassified and could be entitled to up to three years of unpaid overtime.

A.        Executive Exemption

In order to qualify for the FLSA's executive exemption, the following four tests must be met:

  • You must be compensated on a salary basis at a rate not less than $455 per week;
  • Your primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
  • You must customarily and regularly direct the work of at least two or more full-time employees or their equivalent; and
  • You must have authority to hire or fire other employees, or your suggestions and recommendations as to hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

If your employer has classified you as exempt from the FLSA's overtime requirement under the executive exemption, but you do not meet all four tests above, you may be misclassified and could be entitled to up to three years of unpaid overtime.

B.        Administrative Exemption

In order to qualify for the FLSA's administrative exemption, the following three tests must be met:

  • You must be compensated on a salary basis at a rate not less than $455 per week;
  • Your primary duty must be the performance of office or non-manual work directly related to the management or general business operations of your employer or your employer's customers; and
  • Your primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.

If your employer has classified you as exempt from the FLSA's overtime requirement under the administrative exemption, but you do not meet all three tests above, you may be misclassified and could be entitled to up to three years of unpaid overtime.

C.        Professional Exemption

There are two types of professional exemptions under the FLSA: (1) the learned professional exemption; and (2) the creative professional exemption.

In order to qualify for the FLSA's learned professional exemption, the following four tests must be met:

  • You must be compensated on a salary basis at a rate not less than $455 per week;
  • Your primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominately intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
  • The advanced knowledge, discussed under number 2, must be in a field of science or learning; and
  • The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

If your employer has classified you as exempt from the FLSA's overtime requirement under the learned professional exemption, but you do not meet all four tests above, you may be misclassified and could be entitled to up to three years of unpaid overtime.

In order to qualify for the FLSA's creative professional exemption, the following two tests must be met:

  • You must be compensated on a salary basis at a rate not less than $455 per week; and
  • Your primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

If your employer has classified you as exempt from the FLSA's overtime requirement under the creative professional exemption, but you do not meet both tests above, you may be misclassified and could be entitled to up to three years of unpaid overtime.

D.        Highly Compensated Employees

If you perform office or non-manual work and you are paid a total annual compensation of $100,000 or more, which must include at least $455 per week, you are most likely exempt from the FLSA's overtime requirement if you customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee, discussed above.

E.        Computer Related Exemption

In order to qualify for the FLSA's computer related exemption, the following three tests must be met:

  • You must be compensated on a salary basis at a rate not less than $455 per week or be compensated on an hourly basis at a rate not less than $27.63 an hour;
  • You must be employed as a computer system analyst, computer programmer, software engineer, or other similarly skilled worker in the computer field; and
  • Your primary duty must consist of at least one of the following: (1) the application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications; (2) the design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications; (3) the design, documentation, testing, creation or modification of computer programs related to machine operating systems; or (4) a combination of the aforementioned duties.

If your employer has classified you as exempt from the FLSA's overtime requirement under a computer related exemption, but you do not meet all three tests above, you may be misclassified and could be entitled to up to three years of unpaid overtime.

Note: the FLSA's computer employee exemption does not include employees engaged in the manufacture or repair of computer hardware and related equipment.  If you are engaged in either of these activities, and you do not otherwise qualify for a different FLSA exemption, your employer most likely must pay you overtime.

F.         Outside Sales Exemption

In order to qualify for the FLSA's outside sales exemption, the following two tests must be met:

  • Your primary duty must be making sales or obtaining orders or contracts for services.
  • You must be customarily and regularly engaged away from your employer's place of business.

Unlike many other FLSA exemptions, you need not be paid a certain amount per week to qualify for the outside sales exemption.

If your employer has classified you as exempt from the FLSA's overtime requirement under the outside sales exemption, but you do not meet both tests above, you may be misclassified and could be entitled to up to three years of unpaid overtime.

G.        Retail or Service Establishment Exemption

In order to qualify for the FLSA's retail or service establishment exemption, the following three tests must be met:

  • You must be employed by a retail or service establishment.  Retail and service establishments are defined as establishments 75% of whose annual dollar volume of sales of goods and/or services is not for resale and is recognized as retail sales or services in a particular industry;
  • More than half of your total earnings must represent commissions; and
  • Your total compensation divided by the number of hours you work or your regular hourly rate must be greater than one and one-half times (150%) the federal minimum wage.

If your employer has classified you as exempt from the FLSA's overtime requirement under the retail or service establishment exemption, but you do not meet all three tests above, you may be misclassified and could be entitled to up to three years of unpaid overtime.

H.        Other FLSA Exemptions

Although this list is not conclusive, if you qualify for any of the following less common FLSA exemptions, you may not be eligible to receive overtime pay:

  • You are employed by a seasonal amusement or recreational establishment.
  • You are engaged in fishing operations.
  • You deliver newspapers.
  • You are a farm worker employed on a small farm.
  • You are a casual babysitter.
  • You are an auto, truck, trailer, farm implement, boat, or aircraft salesperson employed by a non-manufacturing establishment that is primarily engaged in selling those items to ultimate purchasers.
  • You are employed by a railroad or air carrier.
  • You are a taxi driver.
  • You are a domestic service worker and you reside at your employer's residence.

II.          Preliminary and Postliminary Activities

Preliminary activities are activities which you perform before you begin your "principal" work activities.  Postliminary activities are activities which you perform after you end your "principal" work activities.  Principal activities are activities which you are employed to perform and also include all activities which are an integral (or essential) part of your employer's business.  Your employer must pay you for time spent engaged in principal, integral and essential activities.  Depending on the circumstances, time you spend in preliminary and postliminary activities may also be compensable.

Time you spend in the following preliminary and postliminary activities is not generally compensable:

  • Walking, riding, or traveling to and from the actual place where you perform the principal activities which you are employed to perform.
  • Activities that you perform either prior to or after the time that you end your principal activities.

There are two exceptions in which preliminary and/or postliminary activities are compensable:

  • Such time is considered hours worked pursuant to an express provision of a written or unwritten contract between you and your employer.
  • Such time is treated as hours worked according to custom or practice at the place where the work is performed.

III.          Calculating Overtime Pay

Under the Fair Labor Standards Act ("FLSA"), overtime compensation generally must be paid to covered employees (employees who do not qualify for an FLSA exemption) at a rate of at least one and one-half times their regular rate of pay for each hour worked in excess of 40 hours per workweek.  In addition, a covered employee's regular rate of pay must be equal to or greater than the federal minimum wage.  In most circumstances, overtime pay earned in a particular workweek must be paid on the regular pay day for the pay period in which the overtime wages were earned.

Based on your employer's discretion, your workweek may begin on any day of the week and at any hour of the day.  However, your workweek must be a fixed and regularly recurring period of seven consecutive 24-hour periods.  Therefore, your employer cannot average your hours worked over two or more weeks to determine you hours worked per workweek.

In addition, under the FLSA, your employer is supposed to maintain records of the time you spend performing compensable work activities.  If you bring an overtime claim against your employer, but your employer has failed to maintain the required records, you are entitled to recover overtime compensation based on a good faith (reasonable and realistic) estimate of the time you worked over the past 2 to 3 years for your employer.

A.        Employees Paid by the Hour

If you are paid by the hour, your employer must pay you at least one and one-half times your regular hourly rate for each hour worked over forty hours per workweek.

B.        Employees Paid on a Piecework Basis

If you are paid on a piecework basis, your regular rate of pay is obtained by dividing your total weekly earnings by the total number of hours you work in a particular workweek.  You are entitled to an additional one-half times your regular rate of pay for each hour you work over forty hours per workweek, plus full piecework earnings.

C.        Employees Paid a Salary for a Regular or Specified Number of Hours

If you are paid a salary for a regular or specified number of hours per workweek, your regular rate of pay is obtained by dividing your salary by the number of hours your salary is intended to compensate.  You are entitled to an additional one-half times your regular rate of pay for each hour you work over 40 per workweek, plus your salary.

D.        Employees Paid a Salary on Other than on a Weekly Basis

If you are paid a salary on other than on a weekly basis, your weekly pay must be determined in order to compute your regular rate of overtime pay.  If your salary is intended to cover a half-month, it must be multiplied by 24 and the product divided by 52.  If your salary is intended to cover an entire month, it must be multiplied by 12 and the product divided by 52.

E.        Weekend and Holiday Work

Under the FLSA, you are not entitled to an overtime premium solely because you perform work on a weekend or holiday.

F.         Overtime Pay May Not be Waived

The FLSA's overtime requirement cannot be waived by agreement between you and your employer.  In addition, an announcement by your employer that no overtime work will be permitted, or that overtime work will not be paid unless it is authorized in advance, will not impair your right to compensation for compensable overtime hours worked.

 

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