Overtime: Who Is Exempt From Overtime?Last updated on: March 26, 2015
Overtime: Who Is Exempt From Overtime?
The U.S. government regulates the relationship between employers and employees. In particular, the federal Fair Labor Standards Act (FLSA) requires employers to pay their employees 150 percent of their regular hourly rate for all hours worked beyond 40 hours per week. This requirement does not apply; however, if the worker is an independent contractor rather than an employer, or if an employee falls within one of the FLSA exemptions.
Employers do not need to pay overtime to independent contractors. Although determining whether a worker is an employee or an independent contractor is not always clear-cut, the U.S. Supreme Court has identified the following factors that apply to the question of whether a worker is an employee or an independent contractor:
- Whether the work performed is central to the hiring party’s business. If so, the worker is more likely to be considered an employee. A plumber called in to fix the sink at a software company, for example, is more likely to be an independent contractor than an employee.
- Whether the worker applies management skills that affect his chances for profit or loss. If the worker hires and fires employees who affect his own bottom line, for example, he is more likely to be an independent contractor. An example would be a construction subcontractor.
- Investment in facilities by the worker. The more the worker invests relative to the employer, the more likely he is to be an independent contractor.
- The worker’s skill. If his skill allows him to exercise independent judgment, he is more likely to be an independent contractor.
- The duration of the relationship between the worker and the hiring party. The longer the duration, the more likely the worker is to be an employee.
- The degree of control exercised by the hiring party. A worker who controls his own working hours, for example, is more likely to be an independent contractor.
Although none of the foregoing factors is necessarily decisive by itself, the decision of whether to designate a worker an employee or an independent contractor is often obvious.
The following types of employees are exempt from the overtime requirement under the FLSA, as long as they make a salary of at least $455 per week:
- Executives: The position must be managerial, and it must include the right to hire and fire.
- Administrative personnel: The position must be managerial, and it must involve the exercise of discretion and judgment.
- Professionals: Job duties must include the application of advanced intellectual knowledge in a field of learning, typically one that requires an advanced academic degree (creative professionals such as actors can also be exempted).
- Outside sales staff: The position must consist primarily of making sales to outside parties, and the employee must normally work primarily outside of the employer’s place of business. The $455 per week requirement does not apply.
- Certain computer employees: The employee must be a computer systems analyst, computer programmer, software engineer or something similar and must be primarily engaged in certain specified job duties.
- Certain other exemptions exist, including limited exemptions for police officers and firefighters.
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If you are involved in a dispute over the payment of overtime benefits, or if you simply want to know more about your rights and obligations in this area, your choice of attorney is important. The law firm of Zinda Law Group has been approved by the Better Business Bureau®. Our firm includes several attorneys with rich experience in employment law who are more than ready to advise you and, if necessary, fight for your legal rights. We serve the greater Austin area and are available at 800-863-5312 to schedule a free initial consultation.