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Exemptions

Although most workers do have the right to be paid overtime, some workers do not have this right. These workers are called "exempt" from overtime. Before you decide that an employee is not entitled to overtime, you should check with a lawyer to see if the worker is really "exempt" or not.

Normally, employees with a lot of responsibility and freedom on the job are exempt from overtime. These employees frequently get paid by salary and not by the hour. But it's not always that simple. Just because the worker has a lot of responsibility, or just because the worker gets paid by salary, doesn't mean you don't owe overtime pay. There are very specific tests in the laws to determine who is exempt and who is not. What matters is what the worker does, not how the worker is paid.

Exemptions vary from state to state. Even if a worker is exempt under one of the tests listed below, your state might have stricter laws that give the worker the right to be paid overtime.

• "Professional" employees
• "Administrative" employees
• "Executive" employees
• Outside salespersons
• Other exempt employees
• Is my employee exempt if I call him or her "exempt"?
• How is overtime pay calculated?
  

"Professional" employees

"Professional" employees are exempt from federal laws requiring overtime pay. These employees have received high-level training and usually an advanced degree. Professional employees also make important decisions without a lot of supervision.

Under federal law, people who normally qualify as professionals include lawyers (but not paralegals), doctors, dentists (but not hygienists), registered nurses (but not practical nurses), accountants, architects, actuaries, scientists with advanced degrees, teachers (but not day care providers), and highly trained computer professionals. To be an exempt "professional," the employee also must earn over $250 a week.

Some states define "professional" more narrowly than federal law, and this might give the employee the right to overtime pay even if the job seems somewhat professional.

Because this area is very complicated, you should contact a lawyer who specializes in employment law if an employee claims that he or she has been denied overtime because of misclassification as a professional.

"Administrative" employees

Under federal law, an employee who is legally considered an "administrator" is not entitled to overtime pay. Under a general legal test for who is an administrator, the employee will probably not be an exempt administrator unless he or she meets all of the following requirements:

Earns at least $250 per week, and
Main responsibilities include doing sophisticated office work that has something to do with the company's policies or business operations, and
Spends a lot of time exercising "discretion and independent judgment," i.e., is normally required to make important decisions without a lot of supervision.

An employee who doesn't do all of the above things is probably not an "administrator" and will be entitled to overtime.

Some states define "administrative" more narrowly than federal law, and this might give the employee the right to overtime pay even if you think the job seems somewhat administrative.

Because this area is very complicated, you should contact a lawyer who specializes in employment law if an employee claims that he or she has been denied overtime because of misclassification as an administrator.

"Executive" employees

Executive employees are exempt from federal laws requiring overtime pay.

Most people think that executives are employees who wear fancy suits and work in tall office buildings. Although this is normally true, overtime laws have a different definition of "executive." This is the definition to examine before deciding whether to decline to pay overtime to an employee who manages or directs other people's work.

Under the general legal test for who is an executive, the employee will probably not be exempt unless he or she meets all of the following requirements:

Earns at least $250 per week, and
Regularly directs the work of at least two full time employees, and
Main responsibilities include "managing" the company, a subdivision of the company, or an entire department. ("Managing" means interviewing, hiring, firing, supervising, training, disciplining, evaluating and scheduling employees. Managing can also mean planning how work will be done at the company and having responsibility for things like inventory and payroll.)

An employee who doesn't do all of the above things is probably not an "executive" and will be entitled to overtime.

Some states define "executive" more narrowly than federal law, and this might give the employee the right to overtime pay even if you think the job seems somewhat "executive."

Because this area is very complicated, you should contact a lawyer who specializes in employment law if an employee claims that he or she has been denied overtime because of misclassification as an executive.

Outside salespersons

An employee who travels a lot to make sales may be an "outside salesperson" who does not have the right to get overtime under federal law. But it's not quite that simple. Before deciding not to pay overtime to the employee, you must make sure that (1) the employee's main responsibility is to make sales of products away from the company's offices or showroom, and (2) the amount of time the employee spends on other types of work (such as deliveries or servicing) is small compared to how much that kind of work is done at the company.

Some states define "outside salesperson" more narrowly than federal law, and this might give the employee the right to overtime pay even if he or she spends a lot of time on the road. Contact a lawyer if your employee claims that he or she has been denied overtime because of misclassification as an "outside salesperson."

Other exempt employees

There are a few other kinds of employees that do not have the right to overtime. These include: most truck drivers, most live-in domestic workers, and some agricultural workers.

Is my employee exempt if I call him or her "exempt"?

No, it makes no difference if you call your worker exempt or non-exempt. It also doesn't matter if you give the employee a title that makes it sound like he or she should not be paid overtime. For example, some employers will call workers "assistant managers" (believing they can avoid paying overtime to those employees) when those employees are actually regular line workers who are not exempt and should be paid overtime. What matters is what the employee does, not what he or she is called.