Job Q&A: Overtime

Question: We have two salaried employees who each make more than $52,000 annually. Because of their high salaries, we are wondering if the company can legally consider them exempt from overtime. They aren't supervisors, even though two part-time workers assist them in various clerical duties. So can they be considered exempt from overtime pay? We cannot find anything in the labor law that addresses this situation.

Answer: I'm so glad you sought advice before reclassifying the employees based solely on their salaries, because that would have violated labor laws. A number of factors determine whether an employee is exempt, not just salary.

Employee misclassifications generate steady complaints to the U.S. Labor Department because so much is riding on the categorization. Employees who are truly exempt aren't eligible for overtime no matter how many hours they toil in a workweek. Of course, that means their employers save on the premium pay.

But employers can't declare employees exempt willy-nilly. To declare someone exempt because he or she is a supervisor, for example, the person must meet both a duties and a salary test. The manager must make more than $455 a week, a test your two workers easily exceed.

To satisfy the duties test, an employee's job must primarily involve management. That person must have the authority to hire and fire and he or she must "customarily and regularly" supervise at least two other full-time employees, according to federal statutes.

"That requirement does not appear to be met here," says Irv Miljoner, who heads the U.S. Labor Department's office in Westbury, N.Y.

As a result, the company cannot claim an executive exemption for the two employees.

For more information on exemptions, check out Book 29 of the Code of Federal Regulations, Part 541. Your library may have a copy. It's not the kind of book you'd curl up with, but it has a lot of good information.

For a fact sheet summarizing the rules for the "Executive Exemption," go to Click on the Exemption fact sheet for "Executive Employees."

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