Are You Entitled to Overtime Pay?
By Ric Edelman
If you work for a company that generates annual revenue of $500,000 or more, you are entitled to overtime pay if you work more than 40 hours a week.
So says the Fair Labor Standards Act. This law applies to the vast majority of employees in the United States -- including you, unless you are “exempt” from overtime pay under the law.
The law says that overtime pay is 1½ times your normal pay for hours worked beyond 40 per week. But don’t assume you are exempt because you are an executive, professional, or administrative worker, even though these workers are exempt from overtime pay, because the federal government doesn’t think the way you do.
To see if you fit the executive position exemption, answer these questions:
- Do you supervise at least two employees?
- Do you interview, hire, and train workers?
- Do you set their pay?
- Do you direct the work of others?
- Do you conduct performance appraisals?
- Do you handle employee complaints?
- Do you discipline employees?
- Do you plan the work?
- Do you determine what merchandise is bought, stocked, and sold?
- Do you plan the budget?
- Do you control the budget?
- Do you monitor legal compliance issues?
- Do you have hiring and firing decision-making?
- Do you make recommendations about hiring and firing and promoting workers?
If you have these responsibilities, you’re an executive and thus not entitled to overtime pay.
You are deemed to be a professional (and not entitled to overtime pay) if you are a learned or creative professional. A learned professional has a specialized academic degree in law, medicine, education, engineering, science or similar field. A creative professional works in the arts, such as music, writing, acting, graphics and so on. No one else is considered by the law to be a professional employee.
To see if you fit the administrative position exemption, answer these questions:
- Is your primary duty directly related to the management or general business operations of the employer? (Primary duty refers to your most important duty, not necessarily the one in which you spend the most time.)
- Do you work directly with assisting in the running of the business?
- Do you assist with the work performed on behalf of the employer?
- Can you exercise independent judgment?
- Can you evaluate different courses of action and independently choose which way to go, free from immediate supervision (even if your actions might later be subject to review)?
- Do you have the authority to formulate management policies?
- Do you carry out major assignments in conducting the operation of the business?
- Do you perform work that affects the business to a substantial degree?
- Do you have the authority to commit the employer in matters that have a significant financial impact?
- Do you have the authority to deviate from established policies without prior approval?
- Do you have the authority to negotiate and bind the company in contracts?
- Do you provide expert advice to management?
If you do the above, you are an exempt administrative worker and thus not entitled to receive overtime pay.
But if you do not fit any of the above definitions, you probably are due overtime pay. Lots of Americans work more than 40 hours a week, but they are not receiving overtime pay. Big companies have been sued for failing to pay overtime. A lawsuit against IBM, for example, is seeking three years back pay at overtime rates for tens of thousands of workers. Rite Aid, U-Haul and Taco Bell have been charged with overtime violations and settled for $25 million, $7.5 million, and $13 million respectively.
For more information, go to the Department of Labor’s excellent website at http://www.dol.gov/elaws/flsa.htm. The site is written in plain English and is easy to understand, but expect to spend an hour or two sorting through the information because it contains a great deal of material.