Halunen & Associates

• Employees of certain seasonal amusement or recreational establishments;
• Employees of certain small newspapers and switchboard operators of small telephone companies;
• Seamen employed on foreign vessels;
• Employees engaged in fishing operations;
• Employees engaged in newspaper delivery;
• Farm workers employed on small farms (i.e., those that used less than 500 “man days” of farm labor in any calendar quarter of the preceding calendar year);
• Casual babysitters and persons employed as companions to the elderly or infirm; and
• Highly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 or more (which must include at least $455 per week paid on a salary or fee basis) who customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee.

Exempt from FLSA overtime coverage:

• Certain commissioned employees of retail or service establishments;
• Auto, truck, trailer, farm implement, boat or aircraft salespersons employed by non manufacturing establishments primarily engaged in selling these items to ultimate purchasers;
• Auto, truck, or farm implement parts clerks and mechanics employed by non manufacturing establishments primarily engaged in selling these items to ultimate purchasers;
• Railroad and air carrier employees, taxi drivers, certain employees of motor carriers, seamen on American vessels, and local delivery employees paid on approved trip rate plans;
• Announcers, news editors and chief engineers of certain non metropolitan broadcasting stations;
• Domestic service workers who reside in their employers’ residences;
• Employees of motion picture theaters; and
• Farmworkers

If you have one of these types of jobs, you may not be eligible for overtime pay. However, you may wish contact us, as your job may not fully fit the FLSA’s definition of jobs that are excluded from coverage and/or there may be state law exceptions that apply to your job.

My job is not specifically excluded from FLSA coverage. Does this mean I am eligible to collect overtime?

Again, not necessarily. Employees otherwise subject to the FLSA’s protections can still be considered “exempt,” and ineligible for overtime protection, if both of the following criteria are met:

• The employee is paid a fee (not paid on an hourly basis) of not less than $455 per week, AND
• The employee performs the duties of an exempt employee.

For more information on these two subjects, please see the questions below.

What does it mean to be paid on a “salary basis?”

Getting paid a “salary” generally means getting the same amount of pay each week or each pay period no matter how many hours you work that week. For example, if you are paid on a salary basis, you get paid the same if you work 10, 30, 39, 40, or 46 hours per week (or any other number of hours). You must be paid more than $455 per week ($23,660 per year) for your salary to satisfy the “salary basis” part of the test for overtime exemption. If you are paid an total annual compensation of $100,000 or more, with at least $455 per week ($23,660 per year) paid on a salary or fee basis, you will be exempt from overtime if you customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee. Whether an employee is paid on a salary basis is not affected by whether pay is expressed in hourly terms (as this is fairly common in many payroll computer programs), but whether the employee is in fact paid a “guaranteed minimum” amount that is not subject to being docked based on the quality or quantity of work performed. With a few exceptions, salaried employees cannot have their salary reduced based on the “quality or quantity” of work performed.

For example, if employees receive a salary of $600 per week when they work 40 hours, an employer cannot pay those employees $525 when they work 35 hours (effectively paying the employees $15/hour rather than a salary of $400 per week).

Also, if the employee is ready, willing and able to work, deductions may not be made for time when work is not available, such as, for example, weather or security-related facility closures. If an employer makes improper deductions to an exempt employee’s salary, it may destroy the “salary basis” of pay and may make the employee nonexempt and entitled to overtime. Employees whose salary is “subject to” reduction for reasons inconsistent with the salary basis of pay may no longer be considered under the law to be paid on a salary basis. Thus, if an employer actually does dock employee salaries, or if there is a specific employment policy requiring reductions in salaries in specified situations, the employer may destroy the salary basis of pay. The salary basis pay requirement for exempt status does not apply to some of the “learned professions,” such as lawyers, doctors, or school teachers. These jobs are exempt even if the employees are paid hourly. Another exception is for “computer professionals” (as defined under the law), who may be exempt if they are paid on a salary basis or if they are paid hourly at a rate of at least $27.63. Further, the FLSA also allows some exempt employees to be paid on a fee basis, but this is a fairly rare circumstance.

My employer pays me a salary. Does this mean I am not eligible to collect overtime?

There are two factors that determine whether or not you are eligible for overtime. Being paid a salary of $455 per week or more is only one of the two factors. The other requirement is that you perform the duties of an exempt employee. If your duties are not that of an exempt employee, an employee cannot evade overtime requirements by paying you a salary.

When can my employer legally make a deduction from my salary?

There are some circumstances under which an employer can deduct the pay of a salaried employee without failing the salary basis test and causing the employer to be liable for overtime pay. The following deductions are permitted for otherwise exempt employees:

• an absence from work for one or more full days for personal reasons other than sickness or disability;
• absences of one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness (for example, when an employee is required to use part of a sick time allotment);
• to offset amounts employees receive as jury or witness fees, or for military pay;
• for penalties imposed in good faith for infractions of safety rules of major significance; or
• for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions.

Also, an employer is not required to pay the full salary in the first or last week of an exempt employee’s employment (unless that employee works the full week), or for weeks in which an exempt employee takes unpaid leave under the Family and Medical Leave Act.

What happens if my employer makes an illegal deduction from my salary?

The employer will lose the exemption if it has an “actual practice” of making improper deductions from salary. Factors to consider when determining whether an employer has an actual practice of making improper deductions include, but are not limited to:

• the number of improper deductions, particularly as compared to the number of employee infractions warranting deductions;
• the time period during which the employer made improper deductions;
• the number and geographic location of both the employees whose salary was improperly reduced and the managers responsible; and
• whether the employer has a clearly communicated policy permitting or prohibiting improper deductions.

If an “actual practice” is found, the exemption is lost during the time period of the deductions for employees in the same job classification working for the same managers responsible for the improper deductions. Isolated or inadvertent improper deductions will not result in loss of the exemption if the employer reimburses the employee for the improper deductions. Employers have what is called a “safe harbor” provision, which allows them to fix the problem by reimbursing the employee whose pay was wrongly deducted, after a complaint brings the issue to the employer’s attention. If an employer

• has a clearly communicated policy prohibiting improper deductions and including a complaint mechanism,
• reimburses employees for any improper deductions, and
• makes a good faith commitment to comply in the future,

the employer will not lose the exemption for any employees unless the employer willfully violates the policy by continuing the improper deductions after receiving employee complaints.

What are the types of job duties that cause employees to be exempt from overtime protections?

There are two factors that determine whether or not you are eligible for overtime. Being paid a salary is only one of the two factors. The other requirement is that you perform the duties of an exempt employee. This is sometimes called the “duties test.” The exemption from overtime is limited to employees who perform relatively high-level work involving a good deal of judgment and discretion. Whether the duties of a particular job or category of job qualify as exempt depends on the nature of the particular duties. This is why the exemptions under the duties tests are also known as “white-collar exemptions,” as they are primarily designed to exempt traditional white-collar jobs from overtime payments, without exempting traditional blue-collar jobs. In each case, the analysis is based on the “primary duty” of a particular job, which is defined as:

the principal, main, major or most important duty that the employee performs.

This must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole. Job titles or position descriptions are not that useful in making this determination. (For example, a secretary is still a secretary even if she or he is called an “executive assistant”). It is the actual job tasks that must be evaluated (along with where and how the particular job tasks “fit” into the employer’s overall operations). There are three typical categories of exempt job duties, called “executive,” “administrative,” and “professional.”

If you still have questions concerning your suit, you should contact Halunen & Associates for a free consultation. Don’t allow your employer to deny you compensation for the time you have spent on the job.