How do I know if a job is supposed to be paid overtime?
Employers and employees alike often have a difficult time figuring out whether a particular position is “exempt” from the overtime provisions of the Fair Labor Standards Act (FLSA) – meaning the position does not qualify for overtime – or “non-exempt” from the overtime provisions of the FLSA – meaning the position does qualify for overtime. There are some common misconceptions about overtime eligibility: being paid a salary does not necessarily mean that the position is exempt; in most cases, the size of the employer does not determine eligibility; the title of the position does not determine eligibility; getting paid on a 1099 rather than a W2 does not necessarily mean the position is exempt. But the principal reason for confusion is that the rules for eligibility are not straightforward such that the answer depends on the exact duties and circumstances of a particular job.
The first question to be answered is whether the employer or the employee is covered by the FLSA (in North Carolina, because of the North Carolina Wage and Hour Act, this is not an issue, as every private employer will be covered by the FLSA or the NCWHA, and the overtime rules are practically identical). If the employer has annual gross receipts of $500,000 or more, and any of its activities involve interstate commerce, the employer is covered. If the employer is not covered, but the employee is engaged in interstate commerce, the employee is covered even though the employer is not.
The second question to be answered is whether the employee worked more than 40 hours in a workweek. Overtime under the FLSA is owed only for hours worked over 40 in a week, not for any number of hours worked in a day. So an employee who works three days or 13 hours each in a week, but does not work any hours on the other four days in that week, is not entitled to overtime.
The third and most difficult question to answer is whether the employee is exempt from overtime. There are many types of jobs that are exempt under the FLSA, including school teachers, seamen, camp counselors, fishermen, some agricultural workers, some truck drivers and mechanics, and others. But most of the time, the exemptions that might apply are the “executive,” “administrative,” and “outside sales” exemptions.
The executive exemption applies if the employee is paid on a salary basis at a rate of not less than $455 per week (exclusive of board, lodging or other facilities), whose primary duty is management of the business of a recognized department or subdivision of the business, who customarily and regularly directs the work of two or more other employees, and who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.
The administrative exemption applies if the employee is paid either on a salary or fee basis at a rate of not less than $455 per week (exclusive of board, lodging or other facilities), whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers, and whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
The outside sales exemption applies if the employee is employed with a primary duty of making or obtaining orders or contracts for services or for the use of facilities and who is customarily and regularly engaged away from the employer’s place or places of business in performing such primary duty.
The determination of whether a particular job fits within one of these exemptions requires a detailed analysis of the exact duties the job involves, and how much time is spent on each duty, to determine what the “primary duties” are and how and where those duties are performed. That is why you cannot tell if a position is exempt or non-exempt based on whether the employee is paid a salary or has a title of “supervisor” or “manager.” There are no shortcuts to determine whether a particular position qualifies for overtime.