Labor and Employment

Exempt or Nonexempt Employee: Am I Entitled to Overtime?

By Lisa Guerin, ​J.D., Boalt Hall at the University of California at Berkeley
You are entitled to overtime pay unless you meet the requirements of a specific exemption under the law.

Do you know if your employer classifies you as an exempt employee or a nonexempt employee? The difference is important: Exempt employees are not eligible to earn overtime for extra hours worked, while nonexempt employees are.

Under the federal Fair Labor Standards Act (FLSA), which sets the rules for wages and hours, employees are nonexempt—and therefore, entitled to earn overtime—unless they fit into an exception to the law (called an “exemption”). These exemptions apply only to employees who perform specific types of work and meet other requirements set out in the law. If you don’t meet these requirements, you are entitled to be paid overtime, even if your employer has classified you exempt.

How Overtime Works

Nonexempt employees are entitled to overtime pay under the FLSA if they work more than 40 hours in a work week. For every overtime hour you work, you are entitled to time-and-a-half: 1.5 times your usual hourly wage.

Many states have their own overtime rules, which may provide additional rights. A few states, including California, have a daily overtime standard. Employees in these states are eligible to earn overtime for every hour worked beyond eight in one work day. State law might also require your employer to pay double time, instead of time-and-a-half for certain overtime hours, or require your employer to provide extra pay for working a seventh day in one week. To find out what your state requires, select it from the list at State Wage and Hour Laws.

Which Employees Are Exempt

To qualify as an exempt employee, who is not entitled to overtime, you must fit within an exception to the general FLSA rules. Certain types of work are automatically exempt. For example, employees engaged in fishing and agricultural work, taxi drivers, employees of movie theaters, and car salesmen are all exempt from the FLSA’s overtime rules.

If you don’t work in a special profession that is exempt from the FLSA’s overtime provisions, the exemptions most likely to apply are those for so-called “white collar” employees: administrative, executive, or professional employees; outside salespeople; and computer professionals. For these employees to fit within an exemption, they must:

  • be paid at least a certain amount on a salary basis, and
  • perform specified job duties.

Salary Basis Test

To fit into one of the white-collar exemptions, you must be paid at least $455 per week (or, for computer specialists, at least $27.63 per hour). The federal Department of Labor has proposed regulations that would raise the weekly threshold to $921 in 2016, but those regulations have not yet gone into effect.

You are exempt from overtime only if you receive this amount on a salary basis, which means that you receive the same amount from week to week, regardless of your productivity or your work hours. There are a few situations in which your employer may reduce your pay—for example, if you take a couple of days of unpaid leave under the Family and Medical Leave Act or you quit your job mid-week. However, in general, you will no longer be considered exempt if your employer make deductions from your paycheck based on how many hours you worked that week. (For more on this topic, see our article on the salary basis rule.)

Job Duties Test

To fit into one of the white-collar exemptions, you must perform the job duties associated with that position. For example, you will be an exempt computer specialist employee only if you are a systems analyst, programmer, or software engineer. Requirements for the other exemptions are as follows:

  • Administrative employees: These employees must have the primary duty of performing office or other nonmanual tasks that are directly related to managing the employer’s general business operations or customers. They must also exercise independent judgment and discretion in making important decisions.
  • Executive employees: These employees must have the primary duty of managing the company or one of its departments or subdivisions, must supervise at least two full-time employees, and must have the authority to hire and fire or make significant recommendations on these types of decisions.
  • Creative professional employees: These employees must have the primary duty of work that requires imagination, originality, talent, or invention in a creative or artistic field.
  • Learned professional employees: These employees must have the primary duty of intellectual work that requires advanced knowledge and the consistent exercise of discretion and judgment, in a field of science or learning, of a type that is usually acquired through a lengthy course of instruction.
  • Outside salespeople: These employees must work customarily and regularly away from the employer’s business, taking orders for or selling goods and services.

If You Are Misclassified

If your employer has classified you as exempt, but you don’t believe you meet all of the requirements of any exemption, consider talking to an experienced employment lawyer. Misclassification is unfortunately a very common problem. Some employers simply don’t know the rules, but others are trying to avoid their legal obligations and deny employees the overtime wages they have earned. A lawyer can help you figure out whether you are entitled to overtime and, if so, how to assert your wage rights.

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Mr. Merritt J. Green | June 26, 2015
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