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Government Requirements
Federal Labor Standards Act for Overtime Pay Go to topics
The Federal Labor Standards Act issues rules for overtime. Below is a summary of the rules. Click here for details.

FLSA rules only apply to businesses with $500,000 or more in sales involved in interstate commerce (including calling another company across state lines). It does NOT apply to agriculture or industries with other federal regulations (trucking and rails). There are some other exceptions that are listed here.

ALWAYS pay overtime when:
  • You pay an employee hourly or non-salary wages.
  • You pay an employee less than $455 per week ($23,660 per year).
  • If the employee gives no independent judgment and has no authority.

Pay overtime on full compensation (bonuses, shift differential) - not just hourly salary. Do not pay overtime in comp time.

Your employee may be exempt from overtime pay if:

  • Executive positions

    • Directs 2 or more full-time workers.
    • Has full authority to hire and fire or can give a recommendation for hiring/firing that is given significant weight.
    Fatal examples of workers who are NOT exempt:
    • If they don't have full authority: A safety manager had hiring/firing authority for safety issues over 200+ employees. But the manager didn't customarily and direct work of 2 or more employees abnd didn't assign work or have authority in any other area except safety.
    • If there are multiple people "in charge". There can only be one supervisor. Co-managers or assistant managers are not exempt.
    • If the employee spends a majority of their time doing the same tasks as those they supervise. Usually 50% or more time must be in management, although there are exceptions.
  • Administrative positions This is intended to include senior positions that use discretion and independent judgment - not low-level office workers.
    • Must exercise discretion and independent judgment on significant matters.
    • Cannot work in producing the main product or service of the company. (Must work on the general management of the company.)
    • Can include executive assistants if they truly have authority and can use discretion and independent judgment in their position.
    Fatal examples of workers who are NOT exempt:
    • If they work producing the goods or service of the business. Example: mortgage loan officers - produce the service of a lender. Therefore they are NOT exempt. Administrative workers who manage the overall business could be exempt - but people doing the front-line work are not. Example: Salesperson in retail store cannot be exempt.
    • If they have no discretion. Anyone who follows a set of procedures, rather than providing independent judgment. Example: Bookkeepers. Example: Personnel clerks who screen applicants using the company's standards. Example: Inspectors who use well established techniques and procedures. Example: Lumber graders who use catalogs and standards to make their judgments.
    • If they don't have authority to make independent decisions on matters which affect the business as a whole or a significant part of it. Example: Front office receptionists, typists, administrative assistants.
  • Learned professionals
    • Primary work must require advanced knowledge - predominantly intellectual in character - that requires the consistent exercise of discretion and judgment.
    • Advanced knowledge must be in a field of science or learning.
    • Advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction (not high school).
    Fatal example of workers who are NOT exempt:
    • Accounting clerks and bookkeepers
    • Cooks who predominantly perform routine work
    • Paralegals and legal assistants
    • Engineering technicians
    • Nurses paid hourly
  • Creative professionals
    • Primary work must require invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
    • Technical writers can be exempt IF they have significant discretion in deciding how to construct the technical manuals.
    Fatal example of workers who are NOT exempt:
    • Newspaper reporters who merely rewrite press releases or who write standard recounts of public information by gathering facts on routine community events.
    • Anyone who collects, organizes and records information that is routine or already public, or if they do not contribute a unique interpretation or analysis.
  • Computer-related
    • Can be paid hourly, but must be paid at least $27.63/hr.
    • For c omputer systems analysts, computer programmers, software engineer, and software developers only.
    • Primary job must be systems analysis for hardware, software or system specifications OR design development, documentation, analysis, creation, testing or modification of computer systems programs.
    Fatal example of workers who are NOT exempt:
    • Workers in computer manufacturing, troubleshooting, or repair.
    • Workers who use software, but do not do computer analysis or design.
  • Outside sales
    • Customarily and regularly work away from his/her employer’s place or places of business.
    • Primary duty must be making sales or obtaining orders.
    Fatal example of workers who are NOT exempt:
    • Telephone salespeople who work at home. Home offices are considered the employer's place of business. Working away from the employer's place of business means that the worker goes to the customer or sells door-to-door.
    • Outside drivers who coincidentally do sales. To be exempt, the primary job must be selling.
    • Workers doing promotion that is not connected with sales.
  • White collar worker paid $100,000+
    • Must provide office or non-manual labor.
    Fatal example of workers who are NOT exempt:
    • Workers in construction, production line, or other manual labor jobs.
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