Ever play the game telephone? It’s a game in which one person whispers something into the ear of the next person, and that person is supposed to whisper the same thing into the ear of the next person, and so on. When the group gets to the last person, he or she is supposed to tell the group what was said. Invariably, the final statement is completely different from the initial one. The same thing often happens with respect to people’s understanding of the law – specifically workplace or employment law.
This blog series is meant to address some of the common misconceptions about employment law that float around, and correct any misunderstandings. For the most part, there’s nothing very new about the issues in this series. However, most employment lawyers have heard friends in casual conversation or clients make inaccurate statements about employment law. These misunderstandings can often lead clients into trouble.
You can read the other myths in the series here.
Employment Myth #5: “Those employees are salaried, so they aren’t entitled to overtime.”
Not necessarily. Under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., non-exempt employees are entitled to receive overtime pay at the rate of 1.5 times the employee’s regular rate for each hour worked over 40 in a given workweek. Exempt employees are not entitled to receive overtime. While there are certain exemptions for specific types of workers, many employees may be classified within the “white collar exemptions,” namely the administrative, executive, and professional exemptions. For an employee to fall within one of these exemptions, he or she must satisfy two tests: 1) the Salary Basis Test, requiring the employee to be paid on a salary basis over a certain threshold rate; and 2) the Duties Test, requiring that the employee perform certain duties in accordance with the specific exemption.
While many employers quote their employees an annual salary rather than an hourly rate, it does not mean that they are paid on a salary basis. Getting paid on a salary basis means receiving a set amount of pay per workweek regardless of how much work an employee does in that week or how well he or she does it. It also means that an employer cannot make deductions from that salary, except in certain limited circumstances.
The FLSA is deceptively simple statute. There are many traps for the unwary. Because the FLSA is an employee-friendly statute that provides for collective actions, and awards successful plaintiffs attorney’s fees, unpaid wages, and liquidated damages, plaintiff’s lawyers love bringing claims under this Act.