Many employees believe that if they are paid a salary, they are not entitled to overtime.  This is not always the case.  Under the Fair Labor Standards Act which controls how employees are paid, it is presumed that all employees are entitled to overtime unless the employer can prove they are exempt.  The burden is on the employer to prove that the employees’ duties qualify them for an exemption under the law.  Three of the most commonly cited exemptions for overtime are the administrative, executive and professional exemptions.

Administrative Exemption

Under the administrative exemption, an employee will not be entitled to overtime if he or she is 1) paid a salary at a rate not less than $455 per week, 2) the employee’s primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers, and 3) the employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.  If any of the three prongs are not met, the employee is entitled to overtime.  For example, if that employee is making decisions using independent judgment or discretion, but is paid on an hourly rate with straight time for overtime, that employee is entitled to overtime.  The reason being is that the employee was not paid a “salary” but an “hourly rate.”  Similarly, if an employee is making decisions that are of little to no significance, then the employee is entitled to overtime even if they are paid a salary. 

Executive Exemption

Under the executive exemption, an employee will not be entitled to overtime if he or she is 1) paid a salary at a rate not less than $455 per week, 2) their primary duty is the managing of the enterprise or managing a customarily recognized department or subdivision, 3) the employee customarily and regularly directs the work of at least two or more full time employees, and 4) the employee has the authority to hire or fire other employees, or their suggestions and recommendations regarding hiring, firing, advancement, promotion or any other change of status are given particular weight.   Like with the administrative exemptions, all the prongs must be met.  For example, if the employee is only supervising one other employee the exemption does not apply and the employee is entitled to overtime (even if paid on a salary basis). 

Professional Exemption

Under the professional exemption, an employee will not be entitled to overtime if he or she is 1) paid a salary at a rate not less than $455 per week, 2) their primary duty must be the performance of work requiring advanced knowledge predominantly intellectual in character which includes consistent exercise of discretion and judgment, 3) the advance knowledge must be in a field of science or learning; and 4) the advance knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.   All prongs must be met for this exemption to apply.  If the employee is paid on an hourly basis with straight time for overtime then this exemption does not apply. 

Attorney Beatriz Sosa-Morris successfully argued before the Fifth Circuit Court of Appeals that Marine Inspector also known as Marine Expeditors were not exempt under the law and should be paid overtime.   The Fifth Circuit Court of Appeals agreed and the salary paid Marine Expeditors were entitled to additional pay for the overtime hours they worked as a matter of law. 

Similarly, Attorney Beatriz Sosa-Morris briefed before a Texas court the issue of whether salary paid oil workers, pump truck drivers, and operators should be paid overtime.  The Texas District Court agreed with Attorney Sosa-Morris that the workers, who were paid a salary and a daily bonus, should be paid overtime.   Accordingly, even if you are paid a salary, you may be entitled to overtime.