Understanding Overtime for Salaried Employees
Many people believe that being salaried automatically exempts employees from receiving overtime pay, but this is a misconception. According to the Fair Labor Standards Act (FLSA), salaried employees can qualify for overtime if they are classified as "non-exempt," meaning they do not meet specific exemption criteria. The FLSA mandates that non-exempt employees receive overtime pay at one and a half times their regular rate for hours worked over 40 in a workweek.
To determine eligibility, employees must pass three tests: the Salary Basis Test, indicating a fixed salary; the Salary Level Test, with a minimum of $684 per week; and the Duties Test, involving executive, administrative, or professional responsibilities. Misclassification can result in significant back wages and penalties for employers, highlighting the importance of accurate classification.