How Come You Don’t Get Paid Overtime?

Do you remember when you were an hourly employee and you received “time and a half” for hours worked over forty? Your boss needed you to work and you needed the money. Life was good. A great exchange of extra money for your valuable time.

But now, you are older, wiser, more educated, more experienced and now paid on a “salary”. So what happens when your boss asks you to work over 40 hours? You work… but you don’t get paid.

So whatever happened to overtime pay?

Odds are high, you don’t receive overtime and aren’t required to. In fact, a study done by the Economic Policy Institute (“EPI”) reported that only 11% of American workers are required to receive overtime. This is generally because:

  1. Your position is likely “exempt” under the current definitions of executive, administrative, and professional employees[1] and
  2. Your annual income does not fall below $23,660 ($455 per week) to qualify for mandatory overtime under the Federal Labor Standards Act (“FLSA”).

The FLSA, passed in 1938, gives the Federal Department of Labor (“DOL”) authority to promulgate regulations and enforce federal labor laws. However, the last update to the overtime dollar amount threshold occurred in 1975. As a result, most businesses are able to require “overtime” be performed by the employee without extra pay.

If this strikes you as unfair, then regardless of your political affiliation, you have a friend in the White House. On March 13, 2014, President Barack Obama issued a presidential memorandum calling for revisions of the DOL’s regulations that could have a major impact on salaried workers in America. These revisions are expected this Spring.

The President has called for revisions of the exemptions for “executive, administrative, and professional employees” (often referred to as “white collar” exemptions). These exemptions, in addition to the $455 per week regulations, have been criticized widely and allowed for low-wage positions to be exempt from overtime (i.e. “Assistant Managers” or “Shift Supervisors” at popular fast food restaurants, despite performing the same or similar duties as hourly employees).

So what does this all mean to you? Well, the Economic Policy Institute equates the current $455 per week, $23,660 per annum rate to $984 a week or $51,168 in today’s dollars. Meaning, employers paying less than $984 per week, may be required to pay non-exempt employees overtime if the new regulations adjust to these amounts and definitions are updated. This could have a substantial economic impact on white collar workers either directly in the form of additional compensation for additional hours worked (or reduced hours) or indirectly through increased hiring to fulfill a previous unpaid need.

[1] These are just a few of the positions excluded from the FLSA and state Minimum Wage Acts. The Minimum Wage Act and FLSA have different minimum wage and overtime exemptions. In addition, the Minimum Wage Act does not include many of FLSA amendments, namely, amendments passed in late 1940s.

Overtime laws vary widely from state to state.  If you have questions or concerns whether you are paid appropriately, you should seek legal advice from an employment lawyer.