Most employees on Long Island and in the greater New York area understand that a group of laws and regulations require employers to pay mandatory overtime at the rate of 150% of the employee’s regular rate of pay for every hour worked in excess of forty in a regular week. Most employers and employees also know that these statutes and regulations have a number of exemptions for particular kinds of workers. The exact nature of these exemptions and their application to specific jobs is less well understood.
Who is exempt?
The federal statute that requires paid overtime is the Fair Labor Standards Act (FLSA), a law that was passed in 1938 as part of President Roosevelt’s New Deal. This statute establishes the basic rule for payment of mandatory overtime for hours worked in excess of 40 per week. The law also provides exemptions from mandatory overtime for certain classes of jobs. The most common exemptions apply to administrative, executive and professional employees, commonly referred to as white-collar employees. In order to be exempt under this test, an employee must actually play a role in managing the business enterprise or a department of the business enterprise. The administrative exemption applies to workers whose jobs involve the exercise of discretion and independent judgment.
While the Department of Labor considers a new standard, exempt employees must be paid a salary which is the equivalent of $23,660 annually. Persons who earn at least $100,000 per year re classified as “highly compensated” employees, and they are also exempt from the mandatory overtime rules.
Proving that the exemption applies
The employer who wants to declare an employee exempt from the mandatory overtime rules bears the burden of proving by presenting bona fide proof of the employee’s job duties and responsibilities. The complexity of the exemption rules leads most compensation experts to recommend consulting a knowledgeable labor lawyer in the group that analyzes and applies the overtime rules.