Employee Pay Classifications

The Federal Department of Labor recently fined a local restaurant more than $80,000.00 for not paying their employees overtime. The restaurant had a practice of paying their employees a flat salary each week irrespective of how many hours the employee worked and did not pay overtime. Clearly, the DOL took issue with this.

Most employees are non-exempt employees which means they must be payed overtime for any hours worked beyond forty in a given week. Overtime pay is 1.5 times the regular pay rate. So if an employee is paid $10.00 an hour and works 45 hours in a week they are owed $400.00 for their regular forty hours and an additional $75.00 in overtime for the five hours worked beyond forty.

Some employees are exempt from overtime pursuant to a couple of exceptions. Here is a very simplified overview of the different exemptions. First, the minimum anyone can make and be qualified for an exemption is $455.00 on a salary basis a week; however, just because someone makes $455.00 a week does not mean they are exempt. They must also either be an executive, an administrative employee, a professional, or a computer professional. Employees involved in outside sales are also exempt. Employees involved in non-manual or office work are exempt if they make more than $100,000.00 a year. 

As stated above, this is a very simple explanation of what can be a tricky law. If you think you have been misclassified or if you are an employer with more questions, please feel free to give us a call.