Can Salaried Employees Get Overtime?

Are you thinking of a career change that will take you from an hourly-paid employee to a salaried position? Does the thought of moving up the company ladder send your brain into a tailspin with question after question? I’m sure you have concerns regarding making the switch from hourly to salary. Let’s address the main issue that most people grapple with when making a pay-grade switch.

Can salaried employees receive overtime pay? I’m sure you’ve heard “If you are paid salary, you are not able to receive overtime pay.” This isn’t necessarily true and the manner in which an employee is paid does not determine their right to receive overtime compensation. According to the Fair Labor Standard’s Act (FSLA), salaried employees are eligible for overtime pay, just as their hourly-paid counterparts. Salaried employees may be exempt from overtime compensation if they make more than a specified amount or perform certain duties that are not recognized as qualified for overtime pay.

If you are considering making the switch from an hourly employee to a salaried position, this article has been written with you in mind and geared to give you an insight into your rights as a salaried employee.

Table of Contents

What does it mean to be a salaried employee?

Salaried employees are paid a set amount of money yearly. You can be paid weekly, bi-weekly, or monthly. When you take a salaried position, it generally means you will be paid the same amount of money each pay period regardless of hours worked. If you are a non-exempt employee under the FSLA (which we’ll get to!), however, it does not mean you are ineligible for overtime pay.

There are many benefits to taking a salaried position with your employer. You will have a consistent, dependable paycheck each and every pay period and be better able to stick with a financial budget, as well as feel a better sense of security within your job.

As a salaried employee, you are paid a guaranteed amount that is not subject to being reduced based on the quantity or quality of work performed.

What is the Fair Labor Standard’s Act (FSLA)?

The FSLA establishes the minimum wage, overtime compensation, records, and child labor standards for all full-time and part-time employees in the private sector and in local, federal, and state governments. The Fair Labor Standard’s Act (FSLA) is enforced and administered by the Wage and Hour Division (WHD) of the United States Department of Labor (DOL) for all employees found in the private sector, state, and local government, and federal positions in the Library of Congress, U.S. Postal Service, Postal Rate Commission, and the Tennessee Valley Authority. The United States Office of Personnel Management enforces the FSLA for employees of the Executive Branch agencies. The U.S. Congress regulates FSLA compliance for non-exempt employees of the Legislative Branch.

If you have questions or concerns about the Fair Labor Standard’s Act compliance, you can confidentially contact the Wage and Hour Division at 866-4US-WAGE or www.dol.gov/whd.

According to the FSLA, when is overtime compensation due?

According to the U.S. Department of labor, the FSLA requires overtime compensation “at a rate of not less than one and one-half times (1.5X) an employee’s regular rate of pay after forty hours of work in a workweek” for all covered, non-exempt employees. There are exceptions to the forty-hour workweek rule that may apply to those who work in law enforcement, firefighting, and the medical field.

The FSLA sets no limits on the number of hours worked during the workweek for all employees 16 years of age and older.

Many states have their own set of laws regarding overtime pay and in circumstances where an employee is subject to both Federal and state overtime compensation laws, the employee is allowed to be paid his/her overtime in the manner that will yield the highest rate of pay.

What is a “covered” employee?

There are two ways in which you can be considered a covered employee by the FSLA:

Enterprise coverage: If you work for a business or organization (“enterprises”), you are covered by the FSLA. Businesses must have a minimum of two employees and have at least $500,000 in sales or business done per year. Hospitals, companies providing nursing or medical care to residents, schools, preschools, and government agencies are all considered enterprises, as well.
Individual coverage: Even if you are not covered by enterprise coverage, you are protected by the FSLA if you are employed in commerce or the production or manufacturing of goods and materials for commerce. Those employed in domestic services, like housekeepers, full-time nannies, or chauffeurs, may also be covered by the FSLA.

I’m covered by the FSLA and paid a guaranteed salary. I can still receive overtime, right?

Two main factors will determine if you are eligible to collect overtime compensation:

You are paid a salary of $913.00 or more per week; and
You perform the duties of an exempt employee, although your title may not reflect as such.

If you are paid the salary requirement but do not perform any duties of an exempt position, you are due overtime pay.

What duties could cause me to be exempt from overtime pay?

For you to be considered exempt under the Fair Standards and Labor Act, your job duties must be exempt duties. The analysis of these duties is known as the “duties test.” Exemptions under the duties test are regularly referred to as “white-collar” exemptions, as they are designed to exempt traditional white-collar positions from overtime pay without forcing those in traditional (high-paying, mind you) blue-collar positions to fall under the exemption umbrella.

Three of the general categories of exempt job duties are:

Executive: To be exempt, your primary job duty must be the management of the business, or managing a recognized department or division of the business. You must also regularly supervise two or more full-time employees and have the authority to fire and hire employees.
Administrative: To be exempt, your primary duty must be the execution of office or non-manual work that directly relates to the management or general business operations of your employer. You are also required to exercise discretion and independent judgment regarding matters of significance.
Professional: To be considered exempt, your primary duties as a professional must be the performance of work that requires an advanced level of knowledge in a field of science or education. The advanced level of knowledge must be acquired by a long course of specialized study.

Let’s talk about the differences between exempt & non-exempt employees!

Who is exempt from overtime compensation by the FSLA?

Under the FSLA, some salaried positions may be considered exempt from overtime pay. The definitions of said exemptions are very narrow and your employer (or better yet, you) should carefully review the exact terms and conditions for each position by contacting your local Wage and Hour Division. Positions considered exempt from the FSLA overtime pay law include:

Executive, administrative, and professional positions (including teachers)
Outside sales
Certain computer-related positions as defined by DOL regulations
Seasonal amusement parks
Certain small newspapers
Newspaper delivery
Foreign or American vessel seamen
Fishing operations
Casual (not full-time) child, infirm, or elderly caregivers
Retail or service establishments commissioned employees
Auto, truck, trailer, farm equipment, boat, or aircraft sales
Parts-clerks or mechanics employed by non-manufacturing businesses whose primary goal is the sale of parts/items
Announcers, editors, engineers of non-metropolitan broadcasting networks
Domestic service workers who live with their employer
Motion picture employees
Farmworkers

This is just a small snippet of positions considered exempt. Please consult the Electronic Code of Federal Regulations for the full list of definitions for FSLA exempt positions.

Enough with exemptions already. You said something about ‘a guaranteed amount that is not subject to being reduced based on the quantity or quality of work performed.’ So, my employer can’t make a deduction to my salary?

There are certain circumstances where your employer can make deductions to your salary and not go against the FSLA. These legal deductions include:

An absence from work not related to illness or disability;
For unpaid disciplinary suspensions;
To offset money received for jury duty or military pay; or
For imposed penalties for safety rule infractions.

Also, your employer is not required to pay your full salary if you have chosen to take unpaid leave under the Family and Medical Leave Act (FMLA).

Final Thoughts

Hopefully, this article has helped to clear any haze that may have formed in your brain in regards to your new salaried position and the ability to secure overtime compensation. Good luck in your newest career venture!