Are your employees really exempt from overtime?

Photo by Tim Patterson

The Fair Labor Standards Act says that you must pay nonexempt employees overtime when they work over 40 hours per week. Most of us are familiar with this law and comply with it. Unfortunately, some organizations that believe they are complying with it, aren’t. They are classifying their employees as “exempt” when they really should be classified as nonexempt.

Many people tend to believe that if you receive a salary, then you are exempt from overtime, this is not the case. A salary does not automatically equal exemption, neither does your title or special benefits such as education reimbursement. Exemptions are based on an employees actual duties (not education, salary, or title).  So, just because your title is “Event Coordinator” doesn’t automatically make you exempt under a professional or administrative exemption – your duties have to fit as well. To be exempt, you must fall under one of three main exemption classifications: executive, administrative, and professional – and your duties must pass that exemption test.

For example, if you are being classified under the “executive” exempt classification, your primary duties must include the management of an organization (or a recognized department or subdivision), you must regularly direct the work of 2 or more employees, and you must be able to hire and fire employees. If those tests aren’t met – you don’t fit the executive exemption. To see the full list of employees that are exempt and for more information, click here.

Also, if you do have nonexempt employees, keep in mind that if they work more than 40 hours per week, they must be paid overtime – even if that overtime was not authorized.