Overtime Pay is Generally Required

Under federal labor laws, most employees are entitled to be paid the federal minimum wage (which is currently $7.25 an hour). Furthermore, most employees are entitled to be paid overtime when they work more than 40 hours in a week (your employer cannot avoid paying overtime by merely paying workers a salary). The overtime rate is equal to time and one-half the regular rate of pay. Most state and local labor laws have similar requirements but often have a higher mandated minimum wage.

Salary Pay ≠ Exempt from Overtime

However, certain employees are exempt from these requirements. Consequently, “non-exempt” employees are defined as those who are entitled to minimum wage and overtime, whereas “exempt” employees are defined as those who are not entitled to these benefits. Examples of the types of exempt employees include:

  • Executives
  • Administrative staff
  • Learned professional employee
  • Creative professional employee
  • IT workers like computer system analysts, programmers, software engineers, etc.
  • Outside sales employees
  • And more

In general, exempt employees are expected to work as many hours as necessary to accomplish the work assigned. This means that most exempt employees work more than 40 hours a week — often many more than 40 hours a week — but are not paid overtime.

Since classifying an employee as “exempt” means that no overtime has to be paid, employers have an economic incentive to misclassify employees as exempt. This problem is on par with employers misclassifying workers as “independent contractors” when they are actually “employees.”

If you think your employer has misclassified you as “exempt,” you should consult with Employee Rights attorneys like the ones at Herrmann Law. Failing to pay the required overtime is a form of wage theft. Wage theft is not allowed and employers can be brought to justice. That is what happened in the case of Novick v. Shipcom Wireless, Inc., 946 F. 3d 735 (Court of Appeals, 5th Circuit 2020). In that case, the employer misclassified four employees as “exempt” (i.e. not paid overtime). After trial, a jury found that the employees were really non-exempt (i.e. were actually entitled to overtime). Further, the jury found that the employer was “willful” in misclassifying the workers. The trial court adopted the jury’s finding and awarded the workers actual damages (which was around $7,250 to $8,900 each). This was the amount of overtime that the employees should have received. The court also ordered the employer to pay liquidated damages (another $7,250 to $8,900 each employee). The trial court also ordered the employer to pay the employees’ attorneys’ fees and court costs (about $145,000). As can be seen, misclassifying workers as exempt can be costly for employers.

The federal Department of Labor has established various tests for whether certain employees are truly exempt or not. The tests are slightly different for the different categories of exempt workers. For example, the following test must be met for a “learned professional employee” to be deemed exempt:

  • The employee must be compensated on a salary or fee basis at a rate not less than $684 per week
  • The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character in a field of science or leaning
  • The work requires the consistent exercise of discretion and judgment and
  • The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction

A slightly different test must be met for a “creative professional employee.” That test is:

  • The employee must be compensated on a salary or fee basis at a rate not less than $684 per week and
  • The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor

As another example, to qualify as an exempt administrative employee, the following test must be met:

  • The employee must be compensated on a salary or fee basis at a rate not less than $684 per week
  • The employee must have a primary duty of performing office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers
  • The employee’s primary duty must include the exercise of discretion and independent judgment with respect to matters of significance

Call the Employee Rights Attorneys at Herrmann Law Today

For more information, call the Employee Rights attorneys at Herrmann Law. If you think that your employer has misclassified you as an exempt employee and you think you are entitled to unpaid overtime, call us. We are proven, experienced, employee-focused attorneys representing workers across the United States in all types of workplace disputes. Use our Online Contact page or call us at (817) 479-9229.

The post Have You Been Misclassified as “Exempt” from Overtime? You May be Entitled to Backpay. appeared first on Herrmann Law.