Are you REALLY a salaried worker?

By Katherine Smith Kennedy

Countless times I hear from potential clients, friends, and family, that they work a ton of overtime hours, but because they are salaried, they aren’t paid for their overtime hours. There’s a prevailing belief that because you’re salaried, you’re exempt from receiving overtime pay, and the story ends there. Oftentimes, it does not.

Let’s back up. Under the Fair Labor Standards Act (FLSA--29 USC 20, et al) employers are required to pay employees time-and-a-half for all hours worked over 40 in a workweek. There are several exemptions to this requirement, including employees whose primary duties make them exempt from overtime pay rate. They include administrative, executive, and professional employees (as well as outside salespeople and other more obscure positions). Employees who are deemed to have these exempt duties as the primary responsibilities of their positions have passed prong number two in the ‘exempt from overtime’ category. Let’s look at how the law determines who is and who is not exempt from overtime pay. 

Prong one of the inquiry is that these employees must be paid on a “salaried basis.”  The definition of “salaried basis” is that an employee is paid the same amount, week in and week out, regardless of the quantity or quality of work performed in that week. This has been the law of the land since the mid-twentieth century. It has been modified and qualified by regulations and case-law over the decades, but nevertheless, remains one of the two prongs that employers must prove to successfully argue that an employee is exempt from overtime pay.

But are you truly a “salaried” employee? One way to determine is to ascertain whether there have been any illegal deductions from your regular paycheck. If a single day or less has been deducted from your salaried paycheck for missing work, or if piecemeal deductions have been made from your pay, this could change your exempt-from-overtime status. Beyond that, if you are “subject to deductions,” in other words, you’re warned that you’ll have hours/pay deducted should you miss any amount of work, or if another worker in your same classification and position has pay deducted from their paychecks due to absence or disciplinary reason, this may also nullify your salaried status and make you eligible for overtime pay. 

Here are some valid ways employers may deduct wages without nullifying an employee’s salaried status. These are often accompanied by benefits offered by the employer that offset these deductions. What’s more, first- and last-week-of-employment checks don’t count toward salaried status. But when the facts show that an employer does not intend to pay an employee a predetermined amount, regardless of quantity or quality of their work, the employer is out of luck and can be liable for owed overtime pay. 

In my practice, I find this scenario occurs most often with employers who are regularly violating other laws and regulations, and who otherwise take advantage of or nickel-and-dime their employees and customers.

Knowing the law regarding your eligibility for overtime pay is the first step in protecting your rights. Reach out to us if you have any questions about whether you are being properly compensated for your work. At PSFK Law, protecting working people and their families is the foundation of our practice.