Should You Be Classified as an Hourly Worker Instead of Salaried?

Perhaps the most well-known benefit of earning an hourly wage (versus salaried) is the (supposed) eligibility to receive overtime pay, which, as most everyone knows, is 1.5 times the regular rate of pay. Workers who are eligible for overtime receive this rate whenever they work more than 40 hours in a week. 

However, a common myth is that no salaried workers are eligible to receive overtime pay. The real question that must be answered in order to determine whether an employee is eligible for overtime is whether the employee is exempt or non-exempt. 

Exempt vs. Non-Exempt

If an employee is designated as “exempt,” that means his or her employer is exempt from paying that employee overtime for hours worked over 40 in a week. Merely receiving a salary isn’t enough to make an employee exempt. To truly determine whether or not you are entitled to overtime compensation, the nature of your job and its duties must be scrutinized. 

The exact requirements a worker must satisfy in order to be exempt from overtime laws depend on the type of exemption claimed by the employer. The most common types are the “white collar” exemptions covering executive, administrative, or professional workers. In each of these cases, for an employee to be designated as an exempt salaried worker, the employee must be paid on a “salaried basis,” meaning that they receive the salary each week regardless of the number of hours worked.  The salary must be at least $684 or more per week. Essentially, a salaried basis means the employee is paid a set amount on a regular schedule. Salaried employees who make less than the threshold might be eligible for overtime. Day rates, excessive “per diems,” and other salary-like pay schemes are questionable and should be investigated for possibly not being a true salary basis. The requirement of having to be paid on a salary basis in order to be exempt from overtime under these common exemptions is likely the origin of the myth that merely receiving a salary is enough to be exempt from overtime. 

But that myth is just that, a myth.  Even if a worker is paid on a salary basis, the worker’s job duties must fit within the scope of the exemption.  Otherwise they are owed overtime for hours worked over 40 in a week. Not every salaried worker employers call an “executive, administrative, or professional employee” is properly classified as exempt.  

For example, an employer may classify an “administrative assistant to an executive” as an administrative employee. It is right there in the title after all! But to be an exempt under the administrative exemption, the worker must be able to make decisions in matters of significance.  If the administrative assistant spends most of their time managing the executive’s schedule, correspondence, and other typical secretarial type tasks, then they cannot be denied overtime on the administrative exemption basis. Likewise, an “assistant manager” that doesn’t oversee employees isn’t an “executive” employee. And an employee who doesn’t make decisions based on expertise gained through schooling isn’t a “professional.”  

Again, there are more specific requirements based on the exemption being claimed by an employer (executive, professional, or administrative). There are other types of exemptions such as the outside sales, computer employee, highly compensated, or creative professional exemptions. All of these also have specific requirements that must be met. The burden is on the employer to properly evaluate the job and classify the worker correctly. If the employer misclassifies the worker, the worker is entitled to the unpaid overtime and possibly additional damages.

Conclusion

Unfortunately, there are many employers who misclassify their workers as exempt when, in reality, they do not satisfy the requirements and should be instead classified as non-exempt. This is a common way that employers get around paying workers overtime. If you think you might be getting taken advantage of in this way, Wyly & Cook wants to help you out. Call the firm at 713-236-8330 to discuss your options over a free consultation today.

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Wyly & Cook, PLLC

The team at Wyly & Cook, PLLC brings a diverse body of trial and litigation experience to the table, putting us in a unique position to help clients with a wide range of legal issues.

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