The subject of overtime pay is possibly the most confusing subject for workers seeking to learn more about their employment rights. Many workers do not understand whether or not they are eligible for overtime, or what they should do in the event their employer is not paying them accurately (or at all) for the extra time that they work. (For more information on this topic, please see our site's overtime page.) Complicating an already difficult subject are the overtime regulations which went into effect in August 2004. Many of these regulations can have very different interpretations, and may not have been clarified by court decisions.
On May 18, 2016, President Obama and Secretary Perez announced the publication of the Department of Labor's final rule updating the overtime regulations. This rule is said to extend overtime pay protections to over 4 million workers within the first year of this rule's implementation. These changes will go into effect on December 1, 2016.
On this page, we'll do our best to clarify this complicated subject for you, but if you have remaining questions, you may wish to speak to a local attorney who is knowledgeable about overtime, since it is impossible to anticipate every problem that may have arisen in your workplace.
The overtime exemptions page defines many of the terms used in the law of overtime exemptions. It explains which employees and jobs are not protected by overtime laws; lists the duties and titles that make employers exempt from paying overtime; and explains which pay deductions are legal. This page also explains when and how an employer can fix the error in order to maintain their exempt status.
1. I hear certain jobs being referred to as "exempt" or "non-exempt." What does being "exempt" mean?
2. My job is not specifically excluded from FLSA coverage. Does this mean I am eligible to collect overtime?
4. My employer pays me a salary. Does this mean I am not eligible to collect overtime?
5. When can my employer legally make a deduction from my salary?
6. What happens if my employer makes an illegal deduction from my salary?
7. What are the types of job duties that cause employees to be exempt from overtime protections?
8. 9. How do I know whether I am considered to have the primary duty of "managing the enterprise" or a department or subdivision?
10. I manage one full-time and several part-time employees in my unit. The number of part-time employees I supervise depends on project staffing and time of day. Does this mean I am considered an executive?
11. While I can make a recommendation whether particular employees in my branch keep or advance in their jobs, the final decision is made by the corporate office. Am I considered an executive?
12. I own 25% percent of a design business, but one of my partners makes all of the decisions about hiring and firing. Am I considered an executive?
13. 14. How do I know if my work is considered "directly related to management or general business operations of the employer or the employer's customers"?
15. In my position as an executive assistant, I am able to exercise some discretion and independent judgment. How much is enough to satisfy the requirement of "exercise of discretion and independent judgment" with respect to matters of significance?
16. In my position at a school, I have been told that my job is exempt. Are there special exceptions for school administrators?
17. 18. Who is considered to be a "learned professional"?
19. What does the law consider to be "work requiring advanced knowledge"?
20. What is considered a "field of science or learning"?
21. How is "customarily acquired by a prolonged course of specialized intellectual instruction" defined?
23. I have a law degree, but my job does not actually entail practicing law. Am I considered a "learned professional" just because I have a degree?
24. Who is considered to be a "creative professional"?
25. I am an inventive and talented employee, but surely that doesn't make me a "creative professional." What does the law consider to be "invention, imagination, originality or talent"?
26. What are the "recognized fields of artistic or creative endeavor"?
27. I work with computers: how does the law apply to me?
28. I am a salesperson who visits current and potential customers in the field (known as "outside sales"). How does the law apply to me?
29. How does the law define "making sales" or "obtaining orders or contracts for services or for the use of facilities"?
30. I do some of my sales work in the field, calling on current and potential customers. I do some phone sales work in my company's offices, and also do some promotional work in additional to my sales activities. Am I considered an "outside salesperson"?
31. I drive a truck and sell food products door-to-door. I also deliver items that customers have ordered over the phone or Internet to their door. Is that considered "outside sales"?
32. Who enforces the law?
33. What are the remedies available to me?
34. How do I file a complaint/How long do I have to file?
If you have one of these types of jobs, you may not be eligible for overtime pay. However, you may wish to speak to a local attorney who is knowledgeable about overtime, as your job may not fully fit the FLSA's definition of jobs that are excluded from coverage and/or there may be state law exceptions that apply to your job.
► The employee performs the duties of an exempt employee.
For more information on these two subjects, please see the questions below.
Getting paid a "salary" generally means getting the same amount of pay each week or each pay period no matter how many hours you work that week. For example, if you are paid on a salary basis, you get paid the same if you work 10, 30, 39, 40, or 46 hours per week (or any other number of hours). You must be paid more than $913 per week 47,476 per year) for your salary to satisfy the "salary basis" part of the test for overtime exemption. If you are paid a total annual compensation of $134,004 or more, with at least $913 per week ($47,476 per year) paid on a salary or fee basis, you will be exempt from overtime if you customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee. (See questions 7-26 below for more information.) These values will go into effect December 1, 2016. Until that date, to satisfy the "salary basis" part of the test for the exemption you must be paid more than $455 per week ($23,660 per year). If you are paid a total annual compensation of $100,000 or more with at least $455 per week, you will be exempt from overtime if you customarily and regulary preform at least one duty of an exempt executive, administrative, or professional employee.
Whether an employee is paid on a salary basis is not affected by whether pay is expressed in hourly terms (as this is fairly common in many payroll computer programs), but whether the employee is in fact paid a "guaranteed minimum" amount that is not subject to being docked based on the quality or quantity of work performed.
With a few exceptions, salaried employees cannot have their salary reduced based on the "quality or quantity" of work performed.
For example, if employees receive a salary of $600 per week when they work 40 hours, an employer cannot pay those employees $525 when they work 35 hours (effectively paying the employees $15/hour rather than a salary of $400 per week).
Also, if the employee is ready, willing and able to work, deductions may not be made for time when work is not available, such as, for example, weather or security-related facility closures.
If an employer makes improper deductions to an exempt employee's salary, it may destroy the "salary basis" of pay and may make the employee nonexempt and entitled to overtime. Employees whose salary is "subject to" reduction for reasons inconsistent with the salary basis of pay may no longer be considered under the law to be paid on a salary basis. Thus, if an employer actually does dock employee salaries, or if there is a specific employment policy requiring reductions in salaries in specified situations, the employer may destroy the salary basis of pay. For more information, see question 6.
The salary basis pay requirement for exempt status does not apply to some of the "learned professions," such as lawyers, doctors, or school teachers. These jobs are exempt even if the employees are paid hourly. Another exception is for "computer professionals" (as defined under the law), who may be exempt if they are paid on a salary basis or if they are paid hourly at a rate of at least $27.63. This amount has not changed with the new overtime law.Further, the FLSA also allows some exempt employees to be paid on a fee basis, but this is a fairly rare circumstance.
However, under the new overtime rule which will not go into effect until December 1, 2016, the definition of salary basis now allows nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary test. Nondiscretionary bonuses and incentive payments are forms of compensation promised to employees to encourage them to work more efficiently or remain with the company. Examples of these bonuses which may now satisfy a percent of the standard salary test are: meeting set production goals, retention bonuses, and commission payments based on a fixed formula.
This new salary threshold will be updated every three (3) years to account for inflation. The goal is to maintain a level at the 40th percentile of full-time salaried workers in the lowest-wage Census region. The first salary threshold update will be January 1, 2020.
There are two factors that determine whether or not you are eligible for overtime. Being paid a salary of $913 per week or more is only one of the two factors. The other requirement is that you perform the duties of an exempt employee. If your duties are not that of an exempt employee, an employer cannot evade overtime requirements by paying you a salary. For more information about the duties test, see question 7.
Option 1: Employers may raise the salary and keep the employee exempt from overtime, so long as these employees meet the duties test. This option favors employees who have salaries close to the new salary level provided by the overtime rule and regularly work overtime.
Option 2: Employers may pay overtime in addition to the employee's current salary when necessary—which under the overtime law is 40 hours in a week. This option favors employees who work 40 hours or fewer in a typical workweek, but have occasional periods of time that require overtime for which employers can plan and budget the extra pay during those periods.
Option 3: Employers may evaluate and realign hours and staff workload so that white-collar workers who earn below the salary threshold are not overworked. Thus, employers can see that they may be required to work overtime and can combat that problem in advance by hiring more workers.
► for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions.
Also, an employer is not required to pay the full salary in the first or last week of an exempt employee's employment (unless that employee works the full week), or for weeks in which an exempt employee takes unpaid leave under the Family and Medical Leave Act.
► whether the employer has a clearly communicated policy permitting or prohibiting improper deductions.
If an "actual practice" is found, the exemption is lost during the time period of the deductions for employees in the same job classification working for the same managers responsible for the improper deductions.
the employer will not lose the exemption for any employees unless the employer willfully violates the policy by continuing the improper deductions after receiving employee complaints.
The exemption from overtime is limited to employees who perform relatively high-level work involving a good deal of judgment and discretion. Whether the duties of a particular job or category of job qualify as exempt depends on the nature of the particular duties. This is why the exemptions under the duties tests are also known as "white-collar exemptions," as they are primarily designed to exempt traditional white-collar jobs from overtime payments, without exempting traditional blue-collar jobs.
the principal, main, major or most important duty that the employee performs.
This must be based on all the facts in a particular case, with the major emphasis on the character of the employee's job as a whole.
8. What executive job duties are considered exempt?
► Has the authority to hire or fire other employees, or whose suggestions and recommendations as to the employment status of other employees must be given particular weight.
An employee who holds a fancy title implying that he or she is "the boss" but who does not in fact supervise two or more employees or who does not really have the "primary duty of managing the enterprise" is not performing executive job duties. Thus, for example, a "manager" who does a purely production job but has a "manager" title is not performing executive job duties.
9. How do I know whether I am considered to have the primary duty of "managing the enterprise" or a department or subdivision?
To satisfy the first prong of the executive duties test, you must have the primary duty of managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise.
► monitoring or implementing legal compliance measures.
Possibly, depending on whether you satisfy the other prongs of the executive duties test as well. To satisfy the second prong of the executive duties test, you must customarily and regularly direct the work of at least two or more other employees or their equivalent.
The phrase "two or more other employees" means two full-time employees or their equivalent.
For example, one full-time and two half-time employees are equivalent to two full-time employees. The supervision can be distributed among two, three or more employees, but each such employee must customarily and regularly direct the work of two or more other full-time employees or the equivalent. For example, a department with five full-time nonexempt workers may have up to two exempt supervisors if each supervisor directs the work of two of those workers.
It depends. To satisfy the third prong of the executive duties test, you must have the authority to hire or fire other employees, or your suggestions and recommendations as to the employment status of other employees must be given "particular weight." There are a number of factors to be considered when analyzing particular weight, including but not limited to whether it is part of the employee's job duties to make such recommendations, and the frequency with which such recommendations are made, requested, and relied upon.
Generally, an executive's recommendations must pertain to employees whom the executive customarily and regularly directs. It does not include occasional suggestions.
An employee's recommendations may still be deemed to have "particular weight" even if a higher level manager's recommendation has more importance and even if the employee does not have authority to make the ultimate decision as to the employee's change in status.
Under a special rule for business owners, if you own at least a 20 % equity interest in the enterprise in which you are employed, regardless of the type of business organization (e.g., corporation, partnership, or other), and you are actively engaged in its management, you are considered an exempt executive.
13. What administrative job duties are considered exempt?
► The employee's primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
Merely clerical work may be administrative, but it is not exempt. Most secretaries, for example, may accurately be said to be performing administrative work, but their jobs are not usually exempt. Similarly, filing, filling out forms and preparing routine reports, answering telephones, making travel arrangements, working on customer "help desks," and similar jobs are not likely to be high-level enough to be administratively exempt.
14. How do I know if my work is considered "directly related to management or general business operations of the employer or the employer's customers"?
To meet the "directly related to management or general business operations" requirement, an employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example from working on a manufacturing production line or selling a product in a retail or service establishment.
Work "directly related to management or general business operations" includes, but is not limited to, work in functional 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.
Even if an employee's work is not directly related to the management or general business operations of the employer, an employee may still qualify for the administrative exemption if the employee's primary duty is the performance of work directly related to the management or general business operations of the employer's customers. Thus, employees acting as advisors or consultants to their employer's clients or customers – as tax experts or financial consultants, for example – may be exempt.
However, not all work in this area is considered exempt under the administrative exemption test, as all prongs of the test discussed in question 13 above must be satisfied.
In general, the exercise of discretion and independent judgment involves your ability as an employee to compare and evaluate possible courses of conduct and act or make a decision after you consider all of the various possibilities. The term must be applied in the light of all the facts involved in your particular employment situation, and implies that you have authority to make an independent choice, free from immediate direction or supervision.
Just because your decisions can be revised or reversed after review does not mean that you are not exercising discretion and independent judgment. The exercise of discretion and independent judgment must be more than the use of skill in applying well-established techniques, procedures or specific standards described in manuals or other sources.
► Do you have authority to formulate, affect, interpret, or implement management policies or operating practices?
► Do you carry out major assignments in conducting the operations of the business?
► Do you perform work that affects business operations to a substantial degree?
► Do you have authority to commit your employer in matters that have significant financial impact?
► Do you have authority to waive or deviate from established policies and procedures without prior approval?
The term "matters of significance" refers to the level of importance or consequence of the work performed. You are not considered to exercise discretion and independent judgment with respect to matters of significance merely because your employer will experience financial losses if you fail to perform the job properly. Similarly, if you operate very expensive equipment does not exercise discretion and independent judgment with respect to matters of significance merely because improper performance of your duties may cause serious financial loss to the employer.
Some primarily clerical workers do in fact exercise some discretion and independent judgment in their jobs. However, to "count" the exercise of judgment and discretion must be about matters of considerable importance to the operation of the enterprise as a whole. Routinely ordering supplies (and even selecting which vendor to buy paper clips from) is not likely to be considered high-level enough to qualify the employee for administratively exempt status. Some "secretaries" may indeed be high-level, administratively exempt employees (if they are paid on a salary basis), while some employees with fancy titles (e.g., "administrative assistant") may really be performing nonexempt clerical duties. Each job must be evaluated on a position-by-position and company-by-company basis.
► The employee's primary duty is performing administrative functions directly related to academic instruction or training in an educational establishment., which applies to adjunct members as well as tenure track.
Academic administrative functions include operations directly in the field of education, and do not include jobs relating to areas outside the educational field.
► academic counselors and other employees with similar responsibilities.
► Coaches and assistant coaches so long as the primary duty is teaching. This includes instructing athletes on how to perform a sport. However, if their primary duty is recruitment or manual labor, coaches are not considered teachers.
Having a primary duty of performing administrative functions directly related to academic instruction or training in an educational establishment includes, by its very nature, exercising discretion and independent judgment with respect to matters of significance.
However, because the salary for overtime will be raised significantly to $47,476 on December 1, 2016 from $23,660, higher education employees who may not have historically been eligible for overtime, may now be eligible if their salary is not adjusted to accommodate for this new law to be in effect on December 1, 2016.
17. What professional job duties are considered exempt?
When thinking about professionals, people typically think of doctors, lawyers, and teachers. However, the professional category includes other professions as well.
18. Who is considered to be a "learned professional"?
► The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
The definition of "work requiring advanced knowledge" is work which is predominantly intellectual in character, and which includes work requiring the consistent exercise of discretion and judgment.
Professional work is therefore distinguished from work involving routine mental, manual, mechanical or physical work. 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.
The FLSA distinguishes the exercise of judgment and discretion from the application of particular skills, even high-level skills. A lumber grader, for example, may be highly trained in distinguishing subtle variations in wood but is not performing professionally exempt job duties.
► they are employed and engaged in this activity as a teacher in an educational establishment.
Exempt teachers include, but are not limited to, regular academic teachers; kindergarten or nursery school teachers; teachers of gifted or disabled children; teachers of skilled and semi-skilled trades and occupations; teachers engaged in automobile driving instruction; aircraft flight instructors; home economics teachers; and vocal or instrument music teachers.
The salary and salary basis requirements do not apply to bona fide teachers. Having a primary duty of teaching, tutoring, instructing or lecturing in the activity of imparting knowledge includes, by its very nature, exercising discretion and judgment.
No. An employee holding a valid license or certificate permitting the practice of law or medicine is exempt if the employee is actually engaged in such a practice, and the new overtime law has not changed this requirement. (Your job duties may cause you to be exempt on other grounds, but your degree alone does not automatically make your job exempt on the basis of being a learned professional.) An employee who holds the requisite academic degree for the general practice of medicine is also exempt if he or she is engaged in an internship or resident program for the profession. The salary and salary basis requirements do not apply to bona fide practitioners of law or medicine.
Similarly, an engineer doing real engineering work is performing professionally exempt job duties, but an engineer working as a technician is not. An accountant doing accounting is performing professionally exempt work, but a CPA whose job is really bookkeeping is not.
► The employee's primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
► A combination of the above duties, the performance of which requires the same level of skills.
The computer employee exemption does not include employees engaged in the manufacture or repair of computer hardware and related equipment (although employees in these jobs may be exempt as executives or administrators if their actual job duties fit within those definitions). Employees whose work is highly dependent upon, or facilitated by, the use of computers and computer software programs (e.g., engineers, drafters and others skilled in computer-aided design software), but who are not primarily engaged in computer systems analysis and programming or other similarly skilled computer-related occupations identified in the primary duties test described above, are also not exempt under the computer employee exemption.
► You must be customarily and regularly engaged away from the employer's place or places of business.
The salary test does not apply to the outside sales exemption. If you do not satisfy the requirements of the outside sales exemption, you may still qualify as an exempt employee under one of the other exemptions described above in questions 7-26.
Obtaining orders for "the use of facilities" includes the selling of time on radio or television, the solicitation of advertising for newspapers and other periodicals, and the solicitation of freight for railroads and other transportation agencies. The word "services" extends the exemption to employees who sell or take orders for a service, which may be performed for the customer by someone other than the person taking the order.
The phrase "customarily and regularly" means greater than occasional but less than constant. It includes work normally done every workweek, but does not include isolated or one-time tasks.
An outside sales employee makes sales at the customer's place of business, or, if selling door-to-door, at the customer's home. Outside sales does not include sales made by mail, telephone or the Internet unless such contact is used merely as an adjunct to personal calls. Any fixed site, whether home or office, used by a salesperson as a headquarters or for telephonic solicitation of sales is considered one of the employer's places of business, even though the employer is not in any formal sense the owner or tenant of the property.
Promotion work may or may not be exempt outside sales work, depending upon the circumstances under which it is performed. Promotional work that is actually performed incidental to and in conjunction with an employee's own outside sales or solicitations is exempt work. However, promotion work that is incidental to sales made, or to be made, by someone else is not exempt outside sales work.
Whether you are considered an outside salesperson would depend how often you are in the field, and whether your contacts over the phone lead to contact in the field, or whether phone calls are your sole sales contact with these particular clients.
► the description of the employee's occupation in collective bargaining agreements.
If you need further information about your state's overtime law and/or wish to report a potential state overtime law violation, then you may wish to contact the agency in your state which handles wage and hour/labor standards violations, listed on our site's state government agencies page.
Your state overtime law may have different methods for recovery of unpaid wages, and different remedies to be awarded to those who succeed in proving a violation. For further information, please contact the agency in your state which handles wage and hour/labor standards violations, listed on our site's state government agencies page.
To file a complaint for unpaid overtime wages under the FLSA, you may either go to the WHD, which may pursue a complaint on your behalf, or file your own lawsuit in court (which may require you to hire an attorney).
Your state overtime law may have different deadlines for recovery of unpaid wages. For further information, select your state from the map below or from this list.