My employer told me that since I am being paid a salary, I am not eligible to receive overtime pay (time-and-a-half) no matter how many hours I work in a week. Is he correct?

No. Just being paid on a salary basis is not the test. Your employer has to meet certain exemptions. Genuine executives, administrative employees and professionals do not qualify for overtime pay so long as they are paid by their employer on the "salary basis" as defined by overtime laws. In addition, administrators and professionals can be paid on a "fee basis" which is also very narrowly defined. Simply paying an employee a fixed salary does not mean that the employee is exempt from minimum wage and overtime pay. An employee is exempt only if the employee meets all the requirements of a specific exemption as defined by the Fair Labor Standards Act ("FLSA"). While payment on a salary basis may be one of several requirements for an exemption, it does not necessarily mean an employee is automatically exempt from being paid time-and-a-half for hours worked over 40. For example, a secretary who is paid a salary does not meet the requirements of any of the white collar exemptions and is still entitled to overtime pay. The legal distinction is not between salaried employees and hourly employees; it is between exempt and nonexempt employees.

Many employees are classified as executives, administrative employees, or professionals who really do not qualify for those designations under the FLSA overtime laws. Many employers bestow fancy job titles to employees as an attempt to deny them overtime pay. However, it is your actual work duties that matter, not your title.

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I am a computer network administrator and am paid a weekly salary. My supervisor has told me that I am not entitled to overtime even though I work 60 to 70 hours per week. Am I entitled to receive overtime or not?

You are most likely entitled to be paid time-and-a-half for work over 40 hours per week.

In order to satisfy FLSA's administrative exemption from overtime, an employee must meet the criteria established in the Department of Labor's (DOL) regulations. Under the administrative exemption, the employee's primary duty must be directly related to management policies or general business operations involving the exercise of discretion and independent judgment. Under the regulations, an employee who merely applies knowledge in following prescribed procedures or determines which procedure to follow or whether an object falls into one or another of a number of definite categories is not exercising discretion and independent judgment within the meaning of the regulations. Further, in the data processing field, DOL set forth several specific requirements for the exercise of discretion and judgment. The exemption is appropriate where the systems analyst develops methods to process accounting, inventory, sales, and other business information by using computers. Where network administrators make no independent judgments on matters of great significance to the employer's business; do not decide what software to be loaded or whether to update the software on a particular system; and follow established standards to set up and maintain computers and networks by following recommended procedures for troubleshooting, they are non-exempt and entitled to overtime.

Network administrators not fit the professional employee exemption where they are not engaged in determining hardware, software, or system specifications and did not design, develop, analyze, or modify computer systems or programs.

In Burke v. County of Monroe, 225 F. Supp. 2d 306 (W.D.N.Y. 2002), the trial court held that three network administrators did not satisfy the requirements of FLSA's administrative exemption from overtime because none possessed authority to make independent decisions of significance to the County's business. The plaintiffs worked as computer network administrators for the county of Monroe. Their duties ranged from managing the computer network to troubleshooting and maintenance. The County classified these employees as exempt from FLSA's overtime requirements contending that they were administrative employees who exercised discretion and independent judgment on behalf of the County. Plaintiffs claimed they were improperly classified and brought suit. The court held that the network administrators were entitled to receive overtime because "the majority of their work involved routine duties without the requirement of discretion and independent judgment called for in an exempt position under the FLSA.

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How will the new regulations just issued by the Department of Labor affect my rights to receive overtime?

The new regulations, effective August 23, 2004, are called the FairPay rules. Workers earning less than $23,660 per year — or $455 per week — are guaranteed overtime protection. You can link to the Department of Labor website by clicking New Regulations.

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I am paid on straight commission. Even though I work over 40 hours per week, my employer does not pay time-and-a-half for work over 40 hours. Am I entitled to more compensation?

Employers and employees often mistakenly believe that commission-paid salespersons need not be paid overtime pay under the well-known and commonly utilized exemptions for "white collar" professionals. However, the white collar exemptions for executive, administrative and professional employees are only available if the employee is paid on a salary basis. That is, the employee regularly receives each pay period a predetermined amount representing all or part of the employee's compensation that is not subject to reduction based upon the quantity or quality of the employee's work. Accordingly, strictly commission-paid employees, by their very nature, cannot fall under the white-collar exemptions.

The FLSA provides three types of exemptions that could apply to commission-paid salespersons. First, commission-paid salespersons could be exempt from overtime pay under an industry-specific or job-specific exemption. For example, the FLSA specifically exempts salespersons primarily engaged in selling or servicing automobiles, trucks, farm implements, trailers, boats or aircraft.

Second, commission-paid employees could be exempt as "outside" salespersons. The exemption for outside salespersons is met if the person is employed "for the purpose of and who is customarily and regularly engaged away from his or her place or places of business" in making sales or obtaining orders. According to FLSA regulations, the outside salesperson must spend at least 80% of his or her time performing duties away from his or her place of business or performing work that is incidental to such off-site work (e.g., preparing order forms, making collections, etc.).

Finally, commission-paid "inside" salespersons could be exempt under a special exemption for commission-paid employees of "retail or service establishments." This exemption applies if the employee works in a "retail or service establishment" (as specifically defined by FLSA regulations) and (1) receives a regular rate of pay that is in excess of one and one-half times the applicable minimum wage and (2) more than half of their compensation represents commissions on goods or services. These employees typically are the salespersons that sell "big ticket" items, such as furniture, major appliances, radios and televisions, and men's clothing.

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Can my employer provide me with "comp time" instead of paying me overtime?

With very few exceptions, it is illegal in the private sector to give "comp time" (compensatory time) to an employee in order to avoid paying her/him time-and-a-half for hours that they work in excess of 40 per week. In other words, it is illegal to "carry hours" of an employee from one week to the next to avoid having to give overtime pay.

Time-off arrangements are permitted under the FLSA only in very limited circumstances and if specific arrangements are met. For example, one requirement is that the time-off must be given in the same pay period in which the overtime was worked.

The FLSA does permit public employers to utilize a compensatory paid time-off plan in lieu of payment of overtime pay to its nonexempt employees. Specific requirements exist with respect to such compensatory time-off plans by public employers. Those requirements and rules do not apply to private employers.

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I work for a very small company that is not even incorporated. I thought that the federal overtime laws applied only to large businesses. Is my employer covered by the Fair Labor Standards Act?

Contrary to popular opinion, most employers are covered by the law. The Fair Labor Standards Act applies to enterprises that have employees who are engaged in interstate commerce, producing goods for interstate commerce, or handling, selling or working on goods or materials that have been moved in or produced for interstate commerce. For most firms, an annual dollar volume of business test of $500,000 applies (i.e., those enterprises under this dollar amount are not covered). The following are covered by the Act regardless of their dollar volume of business: hospitals, institutions primarily engaged in the care of the sick, aged, mentally ill or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools and institutions of higher education; and federal, state and local government agencies. Employees of firms that do not meet the $500,000 annual dollar volume test may be individually covered in any workweek in which they are individually engaged in interstate commerce, the production of goods for interstate commerce, or an activity which is closely related and directly essential to the production of such goods. Domestic service workers, such as day workers, housekeepers, chauffeurs, cooks, or full-time baby-sitters, are also covered if they receive at least $1,000 in cash wages from one employer in a calendar year, or if they work a total of more than 8 hours a week for one or more employers.

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If I bring work home, does my employer have to pay me for this time?

Any time that you are working for your employer, such as while eating lunch, bringing work home, etc., and your employer knows it, you are entitled to be paid for that time. If those work hours push you over 40 hours per week, then you are also entitled to overtime pay at time-and-a-half for those extra hours.

Many FLSA lawsuits have involved employers failing to include time spent by employees performing work activities outside of their normal shifts. Some employees, for example, may "come early" and start working before the official start time of their shifts. Such time counts as work time and must be included in FLSA pay computations, provided only that the employer knew or should have known that the employee was beginning work early (and, of course, to the extent that the employee spent pre-shift time actually performing work activities). Pre-shift "roll calls" are work time. Time spent setting up equipment before the official start time of a shift is work time. Some employees may similarly "stay late" after shifts performing work; this time must be counted as work time, as well. Time spent by an employee cleaning equipment after the close of a shift is work time. Post-shift work time could also include time spent by an employee performing job-related activities "on the way home," as for example, a secretary who drops off the day's mail at the post office or delivers some paperwork to a customer or supplier. Some employees take work home. That time may well be work time. Similarly, if an employee is contacted at home by telephone for work-related reasons, the time spent is work time (and, of course, if an employee is "called back" to work, the time counts as work time).

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Are nurses entitled to receive overtime pay?

The first issue that must be addressed is whether the nurse is exempt from being paid overtime as a "learned professional." For the employer to qualify for this exemption, all of the following tests must be met:

The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;

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;

The advanced knowledge 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.

Registered nurses who are paid on an hourly basis must be paid overtime pay regardless of the other factors stated above.  However, registered nurses who are registered by the appropriate State examining board generally meet the duties requirements for the learned professional exemption, and if paid on a salary basis of at least $455 per week, may be classified as exempt.

Licensed practical nurses and other similar health care employees, however, generally do not qualify as exempt learned professionals, regardless of work experience and training, because possession of a specialized advanced academic degree is not a standard prerequisite for entry into such occupations, and are entitled to overtime pay.

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What if I am an independent contractor and not an employee? Am I still entitled to be paid for working overtime?

Employers' misclassification of employees for purposes of overtime is not limited to executives, administrators and professionals. Many workers are classified as "independent contractors" when they should really be classified as employees subject to overtime pay. Manipulation of working relations by employers seeking to avoid employment regulations is not uncommon and there are a growing number of workers who toil in the gray area between "employee" and "independent contractor."

The Fair Labor Standards Act defines "employee" as "any individual employed by the employer." 29 U.S.C. § 203(e)(1). "To employ" under the FLSA, means "to suffer or permit to work." 29 U.S.C. § 203(g). An "employer" includes "any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d).

The Supreme Court has held that courts should apply these terms in light of the "economic reality" of the relationship between the parties. The factors in this economic realities test, although not exhaustive, include: (1) the degree of control over the manner in which the work is performed; (2) the worker's opportunity for profit or loss depending on his managerial skill; (3) the worker's investment in equipment or materials, or his employment of helpers; (4) whether the service rendered requires a special skill; (5) the degree or permanence of the working relationship; and (6) whether the service rendered is an integral part of the employer's business. The economic realities test is not mechanical or formal in its application. Instead, "it is the totality of the circumstances, and not any one factor, which determines whether a worker is the employee of a particular alleged employer." The economic realities test looks to the specific facts of each case to determine whether an entity is an "employer." Therefore, a court will address all factors except those related to profit and loss, special skill, and worker's individual investment, because no FLSA case has found any of these factors significant as to whether a temporary employment agency is an "employer."

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When is an employee exempt from the laws requiring payment of minimum wage and overtime?

An employee is entitled to minimum wage and overtime pay unless the employee falls within one of the specific exemptions set forth in the FLSA. The FLSA contains numerous exemptions that apply to various types of employees. The most common exemptions are the so-called "white collar" exemptions for executive, administrative and professional employees. Two other "white collar" exemptions that may apply are those for outside salesmen and for computer-related occupations. In-home care, another exemption, known as the "companionship services exemption," for employees providing companionship services to the aged or infirm often can come into play.

Specific legal requirements exist for each of these exemptions. Depending upon the exemption involved, the requirements include a combination of factors, such as: the employee's duties, the amount of time spent by the employee performing those duties, and the amount of salary or fees paid to the employee each workweek. Educational background is particularly significant for the professional exemption. For the executive exemption, the employee must be paid on a salary basis. For the administrative and professional exemptions, the employee must be paid on either a salary basis or a fee basis. The method of pay is not a part of the outside salesman exemption. The computer-related occupation permits payment on either a salary or an hourly basis provided certain dollar amounts are met.

All of the requirements of the exemption must be met for the employee to be exempt. Furthermore, the burden is on the employer (not the employee) to prove the requirements for the exemption. The exemptions are based on what an employee actually does. Neither the employee's job title nor the written job description is controlling.

An employer should not simply assume anyone is exempt. It must know and apply the requirements of the specific exemptions to determine if an employee is not required to be paid overtime.

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My employer sends me e-mail's and calls me on my cell phone after I have left work for the day. I also do work at home on my personal computer. Am I entitled to be compensated for this time?

Any time that you are working for your employer, such as while eating lunch, bringing work home, answering e-mail's, pages, telephone calls, etc., and your employer knows it, you are entitled to be paid for that time. If those work hours push you over 40 hours per week, then you are also entitled to overtime pay at time-and-a-half for those extra hours.

Many FLSA lawsuits have involved employers failing to include time spent by employees performing work activities outside of their normal shifts. Some employees, for example, may "come early" and start working before the official start time of their shifts. Such time counts as work time and must be included in FLSA pay computations, provided only that the employer knew or should have known that the employee was beginning work early (and, of course, to the extent that the employee spent pre-shift time actually performing work activities). Pre-shift "roll calls" are work time. Time spent setting up equipment before the official start time of a shift is work time. Some employees may similarly "stay late" after shifts performing work; this time must be counted as work time, as well. Time spent by an employee cleaning equipment after the close of a shift is work time. Post-shift work time could also include time spent by an employee performing job-related activities "on the way home," as for example, a secretary who drops off the day's mail at the post office or delivers some paperwork to a customer or supplier. Some employees take work home. That time may well be work time. Similarly, if an employee is contacted at home by telephone for work-related reasons, the time spent is work time (and, of course, if an employee is "called back" to work, the time counts as work time).

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For a confidential consultation regarding potential employment dispute cases, contact the Law Office of N. James Turner, Esq., P.A. at (407) 422-6464.

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