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How To Know If You Are Entitled To Overtime Compensation

written by Daniel Bryant

Workers regularly inquire about whether or not they are properly being paid pursuant to the Fair Labor Standards Act (FLSA) and Ohio law. The FLSA is complex, and it is not always easy to know whether you may be entitled to a premium for your overtime hours, which is why we welcome you to contact any of the Toledo, Ohio and Columbus, Ohio overtime attorneys at Bryant Legal, LLC to discuss your situation in more detail. There are many exemptions to the FLSA, and each has key nuances that many do not fully understand. The purpose of this post is to clarify the complex nature of the FLSA that governs the pay policies and practices of employees.

Under the FLSA (and Ohio law), everyone is entitled to overtime pay (1.5 times your regular rate of pay for all hours worked over 40 in a workweek) unless they are specifically exempted under the law. In the event you are compensated on a salary basis, you may still be entitled to overtime wages if you work over 40 hours in a workweek and your primary job duties consist of non-exempt work. For more information on whether you have been misclassified, click here.

A. The Overtime Provisions Apply to Employees (not independent contractors, unless you have been misclassified as an independent contractor)

The FLSA only applies to employees—not independent contractors. However, often times companies misclassify their workers as “independent contractors” for purposes of avoiding overtime compensation, tax obligations, workers compensation obligations, among others. Whether you are truly an independent contractor or an employee is determined by applying the test referred to as the “economic realities test.” Under this test, workers are considered employees if they are economically dependent on the employer for their income. In other words, if you work full time for your employer, you are likely an employee. For a more in-depth explanation, click here.

B. Are You Actually Exempt or Did Your Employer just mandate that You are Exempt?

There are at least 44 different exemptions under the FLSA. If one of the exemptions apply, you may not be entitled to a premium for your overtime hours. However, whether you are exempt or not depends on (a) whether you are truly paid on a salaried basis; and (b) your primary job duties. For a more in-depth explanation on whether you have been misclassified as a “salaried employee” (and entitled to overtime) or not (and not entitled to overtime), click here.

With respect to the exemptions, the most common exemptions are referred to as the “white collar” exemptions. They include the following: (1) administrative, (2) professional, and (3) executive. If any of these exemptions apply, you are not entitled to a premium for your overtime pay. As I mentioned above, each exemption requires that the employer pay the employee a salary of at least $455 per week regardless of whether you work less than 40 hours in a workweek. As such, if you make less than $455 per week even if it is labeled as a “salary”, you are likely misclassified and should be paid overtime. The other elements of these three exemptions are discussed below.

1. Administrative Exemption

The administrative exemption requires the employer to prove all of the following:

  • (a) The employee performs office or non-manual work, which is directly related to management of the business;
  • (b) A primary component of which involves the exercise of independent judgment and discretion about matters of significance.

Work “directly related to management of the business” includes, but is not limited to, working in areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations; government relations; computer network, Internet and database administration; legal and regulatory compliance; and similar activities.

In general, the “exercise of discretion and independent judgment” involves the comparison and the evaluation of possible courses of conduct and acting or making a decision after the various possibilities have been considered.  The term, exercise, must be applied in the light of all the facts involved in the employee’s particular employment situation, and implies that the employee has authority to make an independent choice, free from immediate direction or supervision.

The term “matters of significance” refers to the level of importance or consequence of the work performed.  An employee does not exercise discretion and independent judgment with respect to matters of significance merely because the employer will experience financial losses if the employee fails to perform the job properly.

The key here is that the employee’s “primary duty” must be to exercise their discretion and independent judgment concerning matters of significance. Generally speaking, office workers are not exempt if their primary duty is to follow the directives of their employer.

2. Professional Exemption

The Professional exemption requires the employer to prove each of the following:

  • (a) The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
  • (b) The advanced knowledge must be in a field of science or learning; and
  • (c) The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

“Work requiring advanced knowledge” means work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment. A professional employee generally uses the advanced knowledge to analyze, interpret or make deductions from varying facts or circumstances. Advanced knowledge cannot be attained at the high school level.

Fields of science or learning include law, medicine, theology, accounting, actuarial computation, engineering, architecture, teaching, various types of physical, pharmacy,  chemical and biological sciences. These occupations have a recognized professional status and are distinguishable from the mechanical arts or skilled trades where the knowledge, while of a fairly advanced type, is not in a field of science or learning. The learned professional exemption is restricted to professions where specialized academic training is a standard prerequisite for entrance into the profession.

3. Executive Exemption

The executive exemption requires the employer to prove each of the following:

  • (a) The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
  • (b) The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
  • (c) The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

Even from a brief review of the 3 primary exemptions, it is not always easy to determine whether you are entitled to a premium for overtime hours. You must understand each of the above exemptions, as well as the more than 40 other exemptions. As such, it is important to speak with a Toledo, Ohio or Columbus, Ohio overtime attorney to discuss the specifics of your employment relationship to determine whether or not you are entitled to unpaid overtime wages and other compensation.

In the event you believe you have a claim for unpaid overtime, it is important to contact us immediately so that your damages can be preserved. Workers who have a unpaid overtime claim can recover 2 times the amount you are owed in overtime wages, attorneys’ fees, and costs of the litigation. Contact us today to discuss whether you have an unpaid overtime claim by completing a contact form or calling either office of Bryant Legal, LLC directly.

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