Ask Nancy: OT Pay
May 19th, 2010Are exempt employees eligible for OT pay?
HR Professionals should all be up-to-date with revised Fair Labor Standards Act (FLSA) measures. For example, it’s imperative to know which white-collar employees are eligible for overtime pay.
You would think the rules would clarify everything, but lawsuits surrounding this matter are popping up and actually on the increase. The biggest issue is companies incorrectly classifying “exempt employees” who are not eligible for overtime, and “non-exempt” employees who are eligible.
Under the new overtime rules, white-collar employees who earn less than $455 per week ($23,660 annually) are automatically eligible for overtime pay. Those who earn more than $100,000 and perform at least one of the defined “exempt” duties are ineligible.
For employees whose salaries lie between those two parameters, companies must analyze their job duties to determine if they fall into one of the following five exemption categories: executive, professional, administrative, outside sales or computer employee.
By doing this you could actually end up paying out more overtime to lower paying professional workers. But, it’s the law. Also, remember to make the exempt/non-exempt decision based on employees’ job duties, opposed to their title.
If an employee’s status changes, reclassify that person immediately. If an employee’s wages lie slightly below $23,660 annually, assess if your payroll costs are best controlled by simply raising that person’s salary above that threshold to retain his/her exempt status. This is effective as long as the person still meets the job duties guidelines.
Also, review and follow your employee job descriptions. Remember, make the exempt/non-exempt decision based on employees’ duties, not their titles.
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