Are salaried employees entitled to overtime pay?

James Radford

The practice of employers inflating employees’ job titles to avoid overtime pay has received a lot of media attention lately after a study by economists at Harvard Business School and the University of Texas at Dallas. By looking at job listings with managerial titles near the Fair Labor Standards Act’s cutoff for employee overtime pay, the researchers found that inflated titles occurred five times as often just above the threshold. Companies saw substantial savings from this clerical sleight of hand, avoiding paying an estimated $4 billion in wages a year.  

But there’s another common side to overtime exploitation. Workers often believe—and employers often lead them to believe—that salaries are an automatic disqualifier for overtime pay. While the Fair Labor Standards Act’s definitions are incredibly complex, some salaried employees are, in fact, entitled to overtime. And just as companies hire at a manager title without managerial responsibilities to avoid paying overtime rates, they’ll also move employees from an hourly basis to salary to do the same. 

So how do you know if you might be eligible for overtime pay, and what should you do if you believe you are? 

How overtime works 

The Fair Labor Standards Act (FLSA), established under the U.S. Department of Labor as a part of the New Deal in the 1930s, aimed to set parameters on working life during a time of employer abuse. A 40-hour workweek, guidance on minimum wage, limits on child labor, and overtime compensation helped protect workers and force some separation between working life and leisure for Americans. 

Under FLSA rules, hourly employees are almost always eligible for overtime pay: at least time and a half for work above the standard 40 total hours per workweek. These are non-exempt employees. 

But employees may be considered exempt from FLSA overtime rules under three conditions: 

1.     The salary basis test: Employees receive a fixed salary instead of an hourly rate that fluctuates depending on their schedule. 

2.     The salary test: Workers meet the exemption threshold—basically a minimum pay that could be considered a supportive salary. In 2020, this bumped up to $35,568. Some states (though not Georgia) have set their own, higher thresholds. 

3.     The duties test: Primary duties include executive, administrative, or professional work —often considered white-collar work. This is why blue-collar workers, or workers who typically provide manual and physical work, are often still eligible for overtime even if they’re highly paid. 

Employers have a lot of discretion in how they classify employees, and there are many ways to engineer FLSA guidelines to lower payroll costs. Here are some of the most common scenarios where salaried employees are actually due overtime: 

Eligible workers don’t know they’re eligible 

In many workplaces, it’s understood that a salaried job might mean sometimes working late on a project, prepping for a presentation on a weekend or traveling to a conference out of state. By extension, salaried workers tend to expect some flexibility on the part of their employer, allowing them to manage medical appointments and occasional family events without issue. 

Salaried pay also usually means better compensation and high-value benefits. Most salaried workers expect PTO, competitive health insurance, life insurance and retirement plan matching. Ideally, the value of these benefits outweighs the occasional time demands outside of the working week. 

But salaried workers can still be eligible for overtime pay, though most assume they’re exempt unless employed in a field where overtime is widely used and understood, like law enforcement. 

If you’re in a salaried role that’s not an executive, administrative, professional or outside sales position and you’re regularly asked to stay late, work weekends, work through lunch, travel outside of working hours or “volunteer” for events beyond your normal workweek, it’s worth speaking to an employment attorney about the number of hours you are working. 

Workers are promoted to salaried positions but lose out on pay 

Workers often accept and celebrate promotions to salaried positions as a sign of career advancement. But employers sometimes take advantage of FLSA rules to load their workers down with unpaid overtime. Sometimes, losses in potential overtime pay will even overtake the benefits that come along with the salary.  

If your employer switched you to a salaried position without major changes to your job duties, and if you’re regularly required to complete hours of work beyond your normal schedule, an employment attorney may be able to help. 

Workers are misclassified in management roles 

Management positions usually come with added responsibilities: hiring and firing, setting schedules, placing supply orders, or otherwise guiding a company’s operations with skill and expertise. Because of these added responsibilities, managers should earn more and have more control over their hours and career path. 

But, as the Harvard Business School and the University of Texas at Dallas study made clear, companies will inflate titles to avoid paying overtime hours, even if the supposed manager’s work is nearly identical to an hourly counterparts. 

Challenging overtime assumptions 

In the 1970s, not only did most employees working overtime qualify for overtime pay, but more than 60 percent of salaried employees did as well, according to the Economic Analysis and Research Network. As that percentage has dropped over the decades, many workers are no longer aware that they might be entitled to overtime, or they believe their employers will retaliate against them if they raise the issue. The complexity of Department of Labor overtime laws also makes it hard to understand “exempt” and “non-exempt” classifications. 

An employment attorney familiar in labor laws can help, however. Employers who misclassify workers or otherwise withhold overtime pay may be subject to fines and back overtime payments. If you think you’re being treated unfairly, keep a record of the extra hours you work, make note of how other workers with jobs similar to yours are classified, and talk to an employment lawyer who specializes in employment law. 

Contact Radford Scott to discuss your situation 

Employers sometimes take advantage of the complex rules around overtime pay and salaried workers. If you believe you may be eligible for overtime pay, it’s worth speaking to an attorney to learn more about your situation. We take a hands-on approach to every case we work on, and we have an established history of success in Georgia. 

Contact us today to discuss your situation. 


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