When your job requires long hours, you are entitled to be compensated accordingly. For many employees, this means receiving pay at a rate that is 1.5 times higher than your regular rate. Overtime compensation typically kicks in after you have worked 40 hours in a given week. The rules surrounding overtime are outlined in the Fair Labor Standards Act. It is important for all employees to understand what the potential exemptions are to the general overtime laws. If an employer tries to claim such an exemption, employees may need to pursue legal action in order to get the compensation that they deserve.
7 Exemptions to the Overtime Laws
What are some of the exemptions to the requirement for overtime compensation? The following is an overview:
- Employees who are considered to be administrative employees may not be eligible for overtime pay. What is an administrative employee that is exempt from the requirements of the Fair Labor Standards Act? Generally, to fall under the administrative exemption, an employee’s work must directly relate to the management or operations of the business. In addition, the employee must be regularly required to use “discretion and independent judgment” when making decisions that are important to the overall business. While this exemption may at first sound rather broad, the interpretation of the law is such that it should actually be used only in limited circumstances.
Employees who are considered “learned professionals” may not be entitled to overtime compensation. To be a learned professional under the Fair Labor Standards Act, the employee must have a primary job duty that requires advanced knowledge in a recognized field of science, or the job must require learning that is acquired only through a long course of specialized education. Within this exemption, however, there is also something known as the “creative professional.” Creative professionals who have primary work duties that require them to be inventive, imaginative, original, or talented in a recognized field of artistic or creative endeavor may not be entitled to overtime compensation because they fall under one of the exemptions listed under the law.
Employees who are considered executives may be exempt from overtime compensation laws. In order to be deemed an exempt executive, the executive’s primary duties must include the management of the entire company, or, at a minimum, a major division of the company. In addition, the executive must be required to supervise at least two full-time employees on an ongoing basis. Further, the exempt executive must have the authority with regard to employee hiring and termination.
Employees who are hired to be outside salesman are typically not entitled to overtime compensation. There is no minimum salary criteria or salary basis that has to be met in order for these criteria to apply. The primary duty of the employee must be making sales or taking orders for goods or services that are marketed by the employer. In addition, the employee must work away from the employer’s job site for the majority of the time spent working. It is important to note the distinction between an outside and an inside sales representative, because inside sales representatives typically are not exempt from the overtime pay requirements even if they work remotely.
Employees who are considered computer professionals are not deemed to be entitled to overtime compensation under the law. This exemption applies to certain computer programmers, analysts, and engineers. It does not, however, apply to the average IT manager.
Employees who work in retail or service establishments and earn most of their compensation in the form of commissions may not be entitled to overtime compensation. The term “retail or service establishment” is defined by the U.S. Department of Labor.
Employees who are considered “highly paid” may also be exempt from the protections of the wage and overtime laws. The highly paid exemption applies when an employee earns at least $100,000 per year and performs at least one of the duties of an administrative, executive, or professional employee that would otherwise be exempt from the overtime laws.
If your employer is wrongly claiming that you are exempt from receiving overtime compensation, you may need to take legal action. Attempting to navigate this process alone is often a big mistake. We encourage you to check out our free guide, The 10 Biggest Mistakes That Can Hurt Your Wage & Overtime Claim to learn more.