Overtime

Scope

All covered, nonexempt workers must be paid not less than time and one-half the employee’s regular rate for time worked over 40 hours in a workweek. Where an employee is subject to both state and federal overtime laws, the employee is entitled to the higher rate of pay.

Regulatory citations

• 29 CFR 541— Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Computer and Outside Sales Employees

Key definitions

• None

Summary of requirements

Extra pay for working weekends or nights is a matter of agreement between the employer and the employee (or the employee’s representative). The FLSA does not require an employer to provide extra pay for weekends or night work, or to pay double time.

Some states also have their own overtime laws. Although many of those state statutes are similar to the FLSA, some, such as those in California, are both different and more demanding.

Workweek definition. Regular wages and overtime pay applies on a workweek basis. An employee’s workweek is a fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods. It need not coincide with the calendar week, but may begin on any day and at any hour of the day.

Different workweeks may be established for different employees or groups of employees. Averaging of hours over two or more weeks is not permitted. Normally, overtime pay earned in a particular workweek must be paid on the regular pay day for the pay period in which the wages were earned.

Determining the rate of pay. The regular rate of pay cannot be less than the minimum wage. The regular rate includes all remuneration for employment except certain payments excluded by the Act itself. Payments which are not part of the regular rate include:

• Pay for expenses incurred on the employer’s behalf;
• Qualifying premium payments for overtime work;
• Qualifying premiums paid for work on Saturdays, Sundays, and holidays;
• Discretionary bonuses;
• Gifts and payments in the nature of gifts on special occasions; and
• Payments for occasional periods when no work is performed due to vacation, holidays, or illness.

Average hourly rate. Earnings may be determined on a piece-rate, salary, commission, or some other basis, but in all such cases, the overtime pay due must be computed on the basis of the average hourly rate derived from the earnings. This is calculated by dividing the total pay for employment (except for the noted statutory exclusions) in any workweek by the total number of hours actually worked.

When an employee, in a single workweek, works at two or more different types of work for which different straight-time rates have been established, the regular rate for that week is the weighted average of the rates. That is, the earnings from all the rates are added together and this total is then divided by the total number of hours worked at all jobs.

Where non-cash payments are made to employees in the form of goods or facilities, the reasonable cost to the employer or fair value of such goods or facilities must be included in the regular rate.

Fixed sum for varying amounts of overtime. A lump sum paid for work performed during overtime hours without regard to the number of overtime hours worked does not qualify as an overtime premium even though the amount of money paid is equal to or greater than the sum owed on a per-hour basis. For example, no part of a flat sum of $150 to employees who work overtime on Sunday will qualify as an overtime premium, even though the employees’ straight-time rate is $10 an hour and the employees always work less than 10 hours on Sunday. Similarly, where an agreement provides for 6 hours pay at $9.00 an hour regardless of the time actually spent for work on a job performed during overtime hours, the entire $54.00 must be included in determining the employees’ regular rate.

Salary for workweek exceeding 40 hours. A fixed salary for a regular workweek longer than 40 hours does not discharge FLSA statutory obligations. For example, an employee may be hired to work a 45-hour workweek for a weekly salary of $450. In this instance the regular rate is obtained by dividing the $450 straight-time salary by 45 hours, resulting in a regular rate of $10 per hour. The employee is then due additional overtime computed by multiplying the 5 overtime hours by one-half the regular rate of pay ($5 x 5 = $25).

Overtime pay may not be waived. The overtime requirement may not be waived by agreement between the employer and employees. An agreement that only 8 hours a day or only 40 hours a week will be counted as working time also fails the test of FLSA compliance. An announcement by the employer that no overtime work will be permitted, or that overtime work will not be paid for unless authorized in advance, also will not impair the employee’s right to compensation for compensable overtime hours that are worked.

White collar overtime exemptions. Workers earning less than $35,568 per year — or $684 per week — are guaranteed overtime protection.

Section 13 of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional, outside sales, and certain computer employees. To qualify for exemption, employees generally must meet specific criteria regarding their job duties and be paid on a salary basis at not less than $684 per week.

Job titles do not determine exempt status. In order for an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the Department of Labor’s (DOL’s) regulations.

Executive exemption. To qualify for the executive employee exemption, all of the following tests must be met. The employee must:

• Be compensated on a salary basis at a rate not less than $684 per week;
• Have the primary duty of managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
• Customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
• Have the authority to hire or fire other employees, or particular weight must be given to the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees.

Administrative exemption. To qualify for the administrative employee 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 $684 per week;
• Have the primary duty of performing office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
• Have primary duties that include using discretion and independent judgment with respect to matters of significance.

Professional exemption. To qualify for the learned professional employee 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 $684 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.

To qualify for the creative professional employee 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 $684 per week; and
• 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 as opposed to routine menial, manual, mechanical, or physical work.

Computer employee exemption. To qualify for the computer employee exemption, the following tests must be met. The employee must be:

• Compensated either on a salary or fee basis (as defined in the regulations) at a rate not less than $684 per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour;
• Employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below:

The employee’s primary duty must consist of:

1. The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
2. The design, development, documentation, analysis, creation, testing, or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;
3. The design, documentation, testing, creation, or modification of computer programs related to machine operating systems; or
4. A combination of the aforementioned duties, the performance of which requires the same level of skills.

Outside sales exemption. To qualify for the outside sales employee exemption, all of the following tests must be met:

1. The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and
2. The employee must be customarily and regularly engaged in performing those tasks away from the employer’s place or places of business.

Highly compensated employees. Highly compensated employees performing office or non-manual work and paid total annual compensation of $107,432 or more (which must include at least $684 per week paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative, or professional employee identified in the standard tests for exemption.

Blue collar workers. The exemptions provided by FLSA Section 13(a)(1) apply only to “white collar” employees who meet the salary and duties tests set forth in the Part 541 regulations. The exemptions do not apply to manual laborers or other “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy.

FLSA-covered, non-management employees in production, maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers, and laborers are entitled to minimum wage and overtime premium pay under the FLSA, and are not exempt under the Part 541 regulations no matter how highly paid they might be.

Police, fire fighters, paramedics and other first responders. The exemptions also do not apply to police officers, detectives, deputy sheriffs, state troopers, highway patrol officers, investigators, inspectors, correctional officers, parole or probation officers, park rangers, fire fighters, paramedics, emergency medical technicians, ambulance personnel, rescue workers, hazardous materials workers and similar employees, regardless of rank or pay level. This group performs work such as:

• Preventing, controlling, or extinguishing fires of any type;
• Rescuing fire, crime, or accident victims;
• Preventing or detecting crimes;
• Conducting investigations or inspections for violations of law;
• Performing surveillance;
• Pursuing, restraining, and apprehending suspects;
• Detaining or supervising suspected and convicted criminals, including those on probation or parole;
• Interviewing witnesses;
• Interrogating and fingerprinting suspects;
• Preparing investigative reports; or
• Other similar work.

Interaction with other requirements. The FLSA provides minimum standards that may be exceeded but cannot be waived or reduced. Employers must comply, for example, with any Federal, State, or municipal laws, regulations or ordinances establishing a higher minimum wage or lower maximum workweek than those established under the FLSA. Similarly, employers may, on their own initiative or under a collective bargaining agreement, provide a higher wage, shorter workweek, or higher overtime premium than provided under the FLSA. While collective bargaining agreements cannot waive or reduce FLSA protections, nothing in the FLSA or the Part 541 regulation relieves employers from their contractual obligations under such bargaining agreements.