Are You Owed Overtime Wages?

by Jaburg Wilk
Contact

Jaburg Wilk

The Fair Labor Standards Act (FLSA) requires covered employers to pay all non-exempt employees the federal minimum wage. It also requires covered employers to pay non-exempt employees 1.5 times their regular rate for any overtime hours, which are defined as any hour worked in excess of 40 hours in a seven-day workweek. The FLSA is complex, and it is not always easy to know whether you may be entitled to a premium for your overtime hours. There are many exemptions to the FLSA, and each has key nuances that many do not fully understand. The purpose of this article is to summarize what you need to know to determine whether you may be entitled to a premium for your overtime hours.

Are You an Employe

The FLSA only applies to employees—not independent contractors. The test for determining whether you are an employee is referred to as the “economic realities test.” Under this test, workers are considered employees if they are economically dependent on the employer for their income. In other words, if you work full time for your employer, you are likely an employee.

Is Your Employer Covered?

The FLSA applies to all employers who have any contracts with the federal government or who are “engaged in interstate commerce.” Employers are engaged in interstate commerce if (1) employees handle, sell, or otherwise work on goods that have been moved in or produced for commerce, and (2) the employer has annual gross revenue of at least $500,000. In this day and age, almost every employer is engaged in interstate commerce because they buy and sell goods across state lines. Even accepting credit or debit cards from an out-of-state bank or credit card company is generally sufficient to establish the employer is engaged in interstate commerce.  

Most employers are covered by the FLSA given the relatively low gross revenue requirement and the expansive “interstate commerce” test.

Are You Defined as Exempt?

There are at least 44 different exemptions under the FLSA. If one of the exemptions apply, you may not be entitled to a premium for your overtime hours. The most common exemptions are referred to as the white collar exemptions. They include the following: (i) administrative, (ii) professional, and (iii) executive. If any of these exemptions apply, you are not entitled to a premium for your overtime pay. Each exemption requires that the employer pay the employee a salary of $455 per week. The other elements of these three exemptions are discussed below.

Administrative Exemption

The administrative exemption requires the employer to prove all of the following: 

  • The employee performs office or non-manual work, which is directly related to management of the business;
  • A primary component of which involves the exercise of independent judgment and discretion about matters of significance.

Work “directly related to management of the business” includes, but is not limited to, working in areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations; government relations; computer network, Internet and database administration; legal and regulatory compliance; and similar activities.  

In general, the “exercise of discretion and independent judgment” involves the comparison and the evaluation of possible courses of conduct and acting or making a decision after the various possibilities have been considered.  The term, exercise, must be applied in the light of all the facts involved in the employee’s particular employment situation, and implies that the employee has authority to make an independent choice, free from immediate direction or supervision.   

The term “matters of significance” refers to the level of importance or consequence of the work performed.  An employee does not exercise discretion and independent judgment with respect to matters of significance merely because the employer will experience financial losses if the employee fails to perform the job properly.   

The key here is that the employee’s “primary duty” must be to exercise their discretion and independent judgment concerning matters of significance. Generally speaking, office workers are not exempt if their primary duty is to follow the directives of their employer.  

Professional Exemption

The Professional exemption requires the employer to prove each of the following:

  1. The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment; 
  2. The advanced knowledge must be in a field of science or learning; and 
  3. The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.  

“Work requiring advanced knowledge” means work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment. A professional employee generally uses the advanced knowledge to analyze, interpret or make deductions from varying facts or circumstances. Advanced knowledge cannot be attained at the high school level. 

Fields of science or learning include law, medicine, theology, accounting, actuarial computation, engineering, architecture, teaching, various types of physical, pharmacy,  chemical and biological sciences,.   These occupations have a recognized professional status and are distinguishable from the mechanical arts or skilled trades where the knowledge, while of a fairly advanced type, is not in a field of science or learning. The learned professional exemption is restricted to professions where specialized academic training is a standard prerequisite for entrance into the profession.

Executive Exemption

The executive exemption requires the employer to prove each of the following:  

  1. The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
  2. The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
  3. The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

As you can see, it is not always easy to determine whether you are entitled to a premium for overtime hours. You must understand each of the above exemptions, as well as the more than 40 other exemptions.  

Assuming you are a non-exempt employee working for a covered employer, you may have an overtime claim under the FLSA. If you were to file a lawsuit against your employer, you could recover two times the amount you are owed in overtime wages and a mandatory award of attorney fees. An experienced employment attorney can help you determine whether you are owed a premium for overtime hours.  

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Jaburg Wilk | Attorney Advertising

Written by:

Jaburg Wilk
Contact
more
less

Jaburg Wilk on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.