Many employees are not aware that they may be eligible to receive overtime pay for any extra period of hours worked during a workweek. Simply speaking, overtime pay means that an employee, if eligible, is entitled to additional pay for any hours worked in excess of 40 hours in a particular workweek. The key source of overtime pay requirement is the Federal Labor Standards Act (FLSA) – which is a federal law.
What is overtime pay and how is it calculated?
As mentioned above, eligible employees are entitled to overtime pay for any hours worked in excess of 40 hours in a particular workweek. Now the question remains: how much overtime pay should you receive? The FLSA mandates that covered employees must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.
For example, if your regular rate of pay is $12 per hour, and you work 50 hours in a particular workweek, you must get overtime pay for the additional 10 hours that you have worked. Therefore, your overtime pay for that additional 10 hours would be calculated as:
Overtime pay in Texas:
Texas does not have any separate laws regulating overtime pay, and follows federal law; i.e. Federal Labor Standards Act (FLSA). Therefore, in Texas, employers are required to pay their eligible employee’s overtime pay for hours worked over forty hours a week. Because Texas follows the FLSA, employers are required to pay all eligible employees time and a half for all hours worked over 40 during a workweek.
Which employees are eligible for overtime pay?
Not all employees are automatically considered eligible for overtime pay. A worker’s eligibility for overtime pay depends on how the individual is categorized under the Fair Labor Standards Act (FLSA) and/or other laws. Workers are generally divided into two categories:
- Exempt workers, and
- Non-exempt workers.
Only “non-exempt” workers are legally entitled to overtime pay, while “exempt” workers are not. It is therefore important for you to realize if you fall either in the exempt or in the non-exempt category for the purpose of overtime pay.
Who are Exempt employees?
Exempt employees are typically salaried employees. In general, an employee is considered exempt if the following two factors are met:
- You must be paid by salary (not hourly), and
- You must perform executive, administrative, or professional duties.
1. Paid by salary:
Even if salaried, an employee must meet a minimum salary threshold set by the FLSA to be exempt. The minimum salary threshold of the FLSA changes year to year. The latest rule setting the minimum salary level was announced by the U.S. Department of Labor on September 24, 2019, and made the following changes:
- raised the minimum salary earning to $684 per week or to $35,568 per year by an employee;
- raised the total annual compensation requirement for “highly compensated employees” from $100,000 per year to $107,432 per year.
These changes became effective on January 1, 2020.
2. Perform executive, administrative, or professional duties:
If you are an employee engaged in executive, administrative, or professional duties and meet the minimum salary threshold as explained above, you are exempt from the overtime requirement. It is usually the tasks performed on the job, not the job title alone, that determines your exempt versus non-exempt status.
- Executive Overtime Exemption:
In this category, your primary duty must be managing at least part of the employer’s business; supervising at least two full-time employees; and playing roles in determining job status of other employees, including hiring and firing. Examples of exempt executive employees are: CEOs, managers, supervisors, etc.
- Administrative Overtime Exemption:
If you are an exempt administrative employee, you must perform office or other non-manual work that is directly related to the management or business operations of your employer or its customers and must exercise discretion and independent judgment over important business decisions. Examples include employees in human resources, accounting, legal, public relations, compliance, finance, and other related departments.
- Professional Overtime Exemption:
Your job is classified as a professional position if your primary duties require advanced knowledge and extensive education, and you are expected to use discretion. It also includes performing work that requires invention, imagination, originality, or talent in a recognized creative or artistic field. Examples of professional employees are doctors, lawyers, licensed engineers, accountants, registered nurses, dentists, architects, etc.
Beyond these three main categories of exempt employees, there are some other employees who are also considered exempt under the FLSA, and therefore, are not eligible for overtime pay. For example:
- Computer Exemption:
To be in this category, employees must meet the requirements for exemption (for example, salary and earning threshold) and have a computer-related role, such as computer programmer, software engineer, and system analyst.
- Outside Sales Exemption:
This category includes salespeople and marketers who typically perform their work outside of their employer’s business premises.
- Highly compensated employees:
Highly compensated employees must have at least one duty of an exempt administrative, professional or executive employee, and must earn at least $107,432 per year.
If you are considered an exempt (vs. non-exempt) employee, your employer is not required to pay you overtime pay. Rather, it is at your employer’s discretion whether or not to pay you for hours worked overtime.
Who are non-exempt employees?
A non-exempt employee is one who is usually paid by the hour, and who does not perform any of the executive, administrative or professional work. In other words, employees who do not fall under any of the above-mentioned exempt categories are usually considered to be non-exempt employees.
Non-exempt employees are entitled to overtime pay through the FLSA at the rate of time and a half the employee’s regular rate of pay when they work more than 40 hours in a given pay week.
Examples of non-exempt employees include contractors, freelancers, interns, servers, retail associates, and similar jobs.
What remedies do you have if you are not paid overtime compensation?
If you have been denied your overtime pay, the FLSA allows you to collect back pay for all the overtime compensation, liquidated damages, and attorney’s fees. Liquidated damages are awarded if the overtime violation was willful by your employer, and are equal to your back-pay amount. For example, if you are awarded $5,000 in back pay (for overtime compensation) by the court, your liquidated damages will be another $5,000.
If you have overtime pay claims against your employer, you can recover uncompensated overtime for only up to two years dating back from the date of the filing of the lawsuit (and three years if the violation was willful). Time is of the essence, so if you believe you are owed overtime pay by your employer, do not delay and consult with an experienced labor and employment attorney.