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Compliance

OT Rules and the Salaried Employee

The Department of Labor regulations regarding millions of salaried employees who are currently “exempt” from the overtime pay rule of the Fair Labor Standards Act (FLSA) are as follows:

Criteria to Be Considered Exempt From Overtime

To qualify for exemption from the FLSA’s overtime requirements, an employee must be paid a minimum salary level (in 2020, $684 per week/$35,568 per year)AND perform the appropriate exempt duties. To satisfy the exempt duties test, work must be:

    • Executive – Primary duty is management of two or more full-time employees.
    • Administrative – Primary duty is office or non-manual work related to business operation.
    • Professional – Primary duty is performance of work requiring advanced knowledge.
    • Computer Related – Primary duty is computer or program design.
    • Outside Sales – Primary duty is selling products or services at the customer’s place of business or home.

Employer options

  • Increase the salary of an exempt, salaried employee to the new salary level to avoid overtime pay
  • Pay overtime as needed
  • Reduce or eliminate hours worked over 40 in a week
  • Reduce pay and give more hours so salary remains constant
  • Some combination of the above.

Tips for Employers

  • If you have salaried employees who will be eligible for overtime, you can keep them on a salary and still pay them overtime for hours over 40 in a week
  • Compensatory time cannot be used instead of overtime pay if the employee is otherwise eligible for overtime
  • For overtime eligible employees, the employer will have to keep track of daily hours worked.

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