Below are some frequently asked questions regarding overtime pay laws and minimum wage laws.
What is the law that regulates overtime and minimum wage? The Federal law that regulates overtime and minimum wage is the Federal Fair Labor Standards Act, 29 U.S.C. § 201 et. seq. Different states have different overtime and minimum wage laws as well. In general, where the federal and state wage laws have different requirements, employers are required to follow the rules more favorable to employees. Back to Top
What is the minimum wage?
The current federal minimum wage is $7.25 per hour. States may also set their own minimum wage but it must be equal to or greater than the federal minimum wage.
For more information about your state, visit the U.S. Department of Labor's web site. Back to Top
How can I tell if I was paid the minimum wage? Even if you are not paid on an "hourly" basis, you should receive at least the minimum wage for every hour that you work. Divide your weekly compensation for a given week by the number of hours you actually worked that week, and you should be earning at least $7.25 per hour. Back to Top
What is overtime? Under the FLSA, any hours worked in excess of 40 in a workweek are considered overtime. A workweek can be any fixed period of seven consecutive days; the law does not specify the day of the week on which the workweek must begin. Rather, the employer establishes the day of the week that the workweek begins. Each workweek stands alone for purposes of calculating overtime hours; an employee's work hours may not be averaged across a multi-week pay period. Back to Top
Can my employer require me to work overtime? Under the FLSA, as long as they pay you properly, there is no limit to the number of hours your employer can require you to work. Back to Top
How much should I be compensated for my overtime hours worked? Under most circumstances, employees who work over 40 hours per week must be compensated for their overtime hours at the rate of one and one-half times their regular hourly rate (i.e., "time-and-a-half"). However, there are a few exceptions to this rule, as discussed below. Back to Top
Can I be paid a rate other than "Time-And-A-Half" for my overtime hours?
In certain situations, employees can legally be paid less then time-and-a-half for overtime hours. If an employee who is eligible for overtime receives commission as part of his compensation, his overtime pay only needs to include one-half the hourly amount he receives for commission (though his base pay, if he receives any, should still be paid at time-and-a-half). For example, if such an employee earns $1,000 in commission for a week in which he worked 50 hours, he is effectively earning $20/hour from the commission payment. He should be compensated for the 10 overtime hours he worked that week at one-half his commission rate, or $10/hour, in addition to overtime compensation for his base rate, if any.
Another method under which employees can be paid half-time for overtime hours is known as the "fluctuating workweek method." Under this system, the employee must receive a fixed weekly salary for a work schedule that fluctuates from week to week, and the salary must be large enough that the employee receives at least the minimum wage for his longest workweeks. Additionally, there must be a "clear, mutual understanding" between the employer and the employee that the weekly salary is meant to compensate the employee for whatever number of hours the employee might work, whether many or few. If these requirements are met, the employee may be paid at the rate of one-half the effective hourly rate for his overtime hours.
This method is easier to understand with an example. Consider an employee paid under the fluctuating workweek method who receives a weekly salary of $500. If he works any number of hours up to 40 in a week, he should receive $500. If he works over 40 hours in a week, he is owed overtime pay at the rate of one-half his regular rate. The regular rate is computed by dividing the weekly salary by the number of hours worked in the week in question, so the rate fluctuates from week to week. If the employee works 50 hours for a salary of $500, his effective hourly rate would be $10/hour. He should consequently receive $5/hour for the 10 hours of overtime he worked that week, in addition to his regular salary. Back to Top
What does it mean to be paid on a "Salary basis"? An employee paid on a salary basis must receive a "fixed" salary of at least $455 per week, regardless of the number of hours worked. This means that the employee's pay will not be reduced due to variations in the quality or quantity of her work, nor will it be reduced because of partial-day absences from work (though deductions for missing whole days are generally permissible). If your employer docks your pay for partial-day absences, you may be eligible for overtime pay. Back to Top
What are "Exempt" and "Non-exempt" employees? The FLSA requires that most employees receive overtime compensation for hours worked over 40 per week. "Non-exempt" employees are those who are covered by the FLSA's minimum wage and overtime pay requirements and consequently should receive the minimum wage and overtime pay. However, there are exceptions to this rule; jobs which meet certain requirements are considered "exempt" from the minimum wage and overtime requirements of the FLSA. Back to Top
How do I know if I am an "Exempt" employee, and therefore not eligible for overtime compensation?
The exemptions to the FLSA are based on job duties and certain pay requirements, not on job title. The exemptions are complicated, and you should consult one of our overtime lawyers if you are unsure whether you are properly classified as an exempt employee. The information below is meant only as a basic overview of the law.
The most commonly applied exemptions to the FLSA are often referred to as the "white collar" exemptions, which include categories for employees who work in "Executive," "Administrative," or "Professional" capacities. In order to meet the requirements for these three exemptions, an employee must receive a fixed salary of at least $455 per week, as discussed above. An employee's job duties must also be of a certain nature in order to meet the requirements of these three exemptions, as described below.
- The Executive Exemption In order to fall under the Executive exemption, an employee's primary job must be to manage her employer's business or a subdivision or department of the business. She must also regularly supervise two or more employees, and must have authority-or at least significant input-in the hiring, firing, and/or promotion of other employees.
- The Administrative Exemption The Administrative exemption requires that an employee be primarily engaged in office or non-manual work directly related to the management or general operations of his employer or his employer's customers. This essentially means that an administrative employee's job is to help run his employer's or his employer's customers' businesses, as opposed to producing the goods or services from which the businesses ultimately generate revenue. The Administrative exemption also requires that the employee's job involve "the regular exercise of independent discretion and judgment with respect to matters of significance". In other words, a bona-fide administrative exempt employee must be allowed to make relatively important decisions about how to do his job without direct supervision or approval from supervisors.
- Professional Exemptions The Professional exemption actually includes two subcategories-"Learned Professional" and "Creative Professional." The Learned Professional exemption requires that the employee perform work that requires advanced knowledge-usually acquired through extended training or study-in a field of science or learning. Most commonly, this exemption applies to workers who have advanced degrees or specialized training, such as doctors, lawyers, teachers, accountants, etc. The Creative Professional exemption is somewhat similar, but requires that an employee's primary job involve creativity, imagination, or artistic talent applied in a recognized field of "artistic or creative endeavor." For example, this exemption may apply to musicians, actors, writers, etc.
There are also exemptions from the FLSA for certain employees who work in sales. "Outside sales" employees-those whose primary duty is sales and who regularly work away from their employer's place of business may be exempt. Outside sales employees do not need to be paid a fixed salary in order to meet this exemption. Salespeople who work in retail or service establishments may also be exempt if more than half of their income is from commission and they regularly receive at least $7.73 per hour.
Finally, certain employees who work with computers may also be exempt from the overtime requirements of the FLSA. Such employees must be paid at least $27.63 per hour or they can be paid a salary of at least $455 per week, as discussed above. Additionally, exempt computer employees must be engaged in systems analysis, software design, or some combination of these duties to be exempt. If you work with computers and you simply install, support, or maintain computer hardware and software, you may not be exempt.
As you can see, the exemptions to the FLSA can be complex and confusing. Frequently, employers do not understand these rules, or they interpret them to their own benefit. If you do not fit into one of the categories described here and you do not receive overtime pay, you may be misclassified as an exempt employee. If you think you may be owed overtime pay, please contact one of our overtime lawyers.
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What can I do if my employer has wrongfully withheld my overtime pay or minimum wage? If you are owed overtime pay or minimum wage, you should contact one of our experienced overtime attorneys to help you recover the pay you are owed. Under the FLSA, employees who are "similarly situated" (i.e., they work in similar jobs and are subject to the same pay policies and procedures) can pursue their back wages through a "collective action." This is often the most effective way for employees to recover their overtime pay, because it allows a group of employees the advantage of lower individual costs to vindicate their rights by the pooling of resources. Nichols Kaster's class action attorneys have represented more than 10,000 employees in class actions and FLSA collective actions, recovering millions of dollars in wages for the employees who earned them. If you believe you are owed overtime pay or minimum wage, please contact us and tell us about your case. Back to Top
Is there a statute of limitations on wage claims? The FLSA allows you to recover the overtime pay you are owed for hours worked within two years back from the date you file suit or consent to join an existing lawsuit. For example, if an employee were to file an FLSA lawsuit on January 1, 2006, he could only attempt to recover pay for time worked after January 1, 2004. In some cases, where the employer is found to have willfully or recklessly violated the FLSA, you may be able to recover pay from three years prior to the date you file suit or consent to join an existing lawsuit. Because of these limitations, if you think you may be owed overtime pay it is important that you consult an overtime lawyer as soon as possible. If you do not pursue the pay you are owed, some or all of your claim may be barred by the passage of time. Back to Top
How much can I recover if I file suit? The FLSA allows you to recover the overtime and/or minimum wages you should have been paid within the time frames discussed above. In some cases, you can also recover liquidated damages in an amount equal to the wages you are owed. If you prevail in your claim, you may also be awarded attorneys' fees and costs. Back to Top
Can my employer fire me if I file a lawsuit or complain about overtime or minimum wage? Any kind of retaliation against an employee for participating in a lawsuit or administrative proceeding under the FLSA is against the law. Back to Top
What if I signed a contract or otherwise agreed to work overtime without pay? Generally, employees are not able to waive their right to overtime pay through implicit or explicit agreement with the employer. Regardless of the terms of your employment, your employer must pay you overtime if you are non-exempt under the FLSA.Back to Top
Am I really an independent contractor?
In an effort to cut costs, employers are increasingly classifying workers improperly as “independent contractors.” This classification exploits can exploit workers out of entitled minimum wage, overtime compensation, retirement and/or health benefits, FICA taxes, workers’ compensation and unemployment.
The employer’s use of a Form 1099 does not automatically make an individual an independent contractor in the sense relevant to overtime and minimum wage laws. Instead, courts consider several important factors to determine whether a worker has been improperly classified as an independent contractor. These factors include: (1) the degree of control exercised by the employer over the workers, (2) the workers’ opportunity for profit and loss and the workers’ investment into the business, (3) the workers’ investment into tools and materials, (4) the degree of specialized skill and independent initiative required to perform the work, (5) the duration of the working relationship, and (6) the extent to which the work is an integral part of the employer’s business. No one factor is determinative; rather, courts look at all circumstances of a working relationship to determine the proper classification.Back to Top