Under the federal Fair Labor Standards Act (FLSA), employers must pay overtime – time and a half – to employees who work more than 40 hours in a workweek. While most employees are covered by this rule, certain categories of employees are exempt from the overtime requirements, which means they are not entitled to earn overtime.
Some employees are exempt simply because of their occupations, regardless of how much they are paid. For other job categories, however, the employee must perform certain job duties and must also meet a salary test in order to be exempt from overtime. Under the salary test, the employee must earn at least $455 per week and be paid on a “salary basis.”
Only certain categories of jobs are subject to the salary basis test. They include:
For more information on these exemptions, see Understanding the White Collar Exemptions.
You are paid on a salary basis if you receive your full salary for any week in which you perform any work, regardless of how many hours you work or the quality or amount of work you do. The purpose of this rule is to make sure that employers don’t treat exempt employees like hourly employees. In exchange for not having to pay exempt employees overtime, employers are required to treat them more like professionals who have some discretion in planning their days and determining how to meet their job requirements.
An employer may pay an employee less than a full week’s salary (referred to as “docking” the employee’s pay) without breaking the salary basis rule if the employee takes time off:
If your employer doesn’t follow the salary basis rule (for example, by docking your pay in circumstances not covered by one of the exceptions listed above or by adjusting your pay up and down each week to correspond to how many hours you work), you may be entitled to compensation. Employers won’t be legally liable if the pay docking is isolated and inadvertent, as long as employees are promptly reimbursed for any money accidentally withheld. And, even if the pay docking isn’t isolated and inadvertent, employers can take advantage of the FLSA's “safe harbor” provision to avoid losing the exemption status if all of the following are true:
However, if an employer cannot claim the safe harbor provision, it could lose the overtime exemption for all employees in the job category that was improperly docked. In other words, your employer would owe you, and your coworkers in the same job position, overtime pay for any hours worked beyond 40 hours in a work week.
If you believe your employer has failed to pay you on a salary basis, an experienced employment lawyer can assess your case and help you decide how best to protect your interests.