By: Kathy Hahner
Everyone knows that employers must pay eligible employees overtime for any work completed beyond 40 hours in a week. However, not understanding who is an “eligible employee” could be costly. The law views employees as “Exempt” or “Non-exempt.” Exempt employees are not entitled to overtime. Non-exempt employees must be paid time-and-a-half for any hours worked over forty in a week. The problem for a lot of employers is that they consider certain employees exempt when they are not. The most common categories of exempt employees are:
- Executive: the employee primarily supervises two or more full time employees, and has the authority to hire and fire or to make recommendations regarding other employees;
- Administrative: the employee primarily evaluates different plans of action, and has the authority to make a decision as to different courses of action;
- Professional: an employee with an advanced degree (i.e. doctor or dentist).
Even knowing the exempt employee categories, there are three big overtime myths that can cause employers problems.
“Our employees are paid a salary; they must be exempt from overtime.”
By itself, being paid a salary does not mean an employee is exempt. For starters, the employee must have an annual salary of at least $23,660. If the employee meets that threshold, he or she must still meet the requirements to be exempt as an Executive, Administrative, or Professional employee. Therefore, a receptionist whose job description does not qualify as an exempt employee can be paid a salary, but he or she must still be paid overtime for working more than 40 hours in a week. Importantly, even if a salaried employee is exempt, he or she may become non-exempt if deductions are taken for time away from the office.
“This employee is a supervisor, so we don’t have to pay him or her overtime.”
An important title alone is not enough to make an employee exempt from overtime. To be exempt as a supervisor, in addition to managing two or more individuals, the employee must be responsible for hiring and firing employees, and must have some control over the employees’ pay and hours.
Therefore, an evening shift manager at a restaurant that is not in charge of scheduling, hiring, or firing is not an exempt employee, even though he or she may be the “supervisor” or “manager” on duty.
“The employee volunteered to work extra hours or did not receive permission to work overtime, and therefore we don’t have to pay overtime.”
Any non-exempt employee must be paid overtime for working more than 40 hours a week, regardless of the reason why he or she worked. If the employee comes in early or stays late to review emails or prepare for his or her day, the company must pay overtime if the additional time pushes the employee over his or her 40 hours, even if that time was not approved. Importantly, when calculating hours for overtime, the focus is on more than 40 hours per week, not the total number of hours worked in a pay period. In general, the Fair Labor Standards Act does not allow “comp time.”
The Fair Labor Standards Act and Ohio wage laws are more complicated than many people realize. Because of that, all employers must be absolutely certain that their employees are categorized and paid correctly. If you have any questions about paying your employees overtime, please contact your Stark and Knoll attorney to help.