Many employers do not realize that paying an employee a fixed salary does not necessarily mean the employee is exempt from overtime protection under state and federal laws. Being paid a salary is not the same as being exempt.
Exempt employees are not covered by, or are “exempt” from, overtime protection. When exempt employees work more than 40 hours in a week, they are not entitled to receive any additional pay for the hours they work over 40 in a week.
In order to be exempt, an employee must be paid a salary AND perform the duties of an exempt employee. The so-called duties test is an analysis of whether an employee’s duties fall within an exempt category. Some of the exempt categories are for administrative, executive, professional, outside sales, or commissioned sales employees in certain businesses. Each category has its own definitions and requirements that must be met in order for an employee to be exempt
On the other hand, non-exempt employees are protected by overtime laws and therefore are entitled to overtime when they work more than 40 hours in a week. Non-exempt employees cannot waive their entitlement to overtime wages, meaning they cannot waive their non-exempt status. So even if a non-exempt employee voluntarily agrees to give up overtime and be paid a salary, employers are still required to pay the employee overtime. Failing to pay a non-exempt employee overtime is grounds for what can be a very costly wage and hour claim.
If you have questions regarding whether your employees are exempt or non-exempt from overtime protection, please contact Carrie Roelle at (812) 423-3183 or CRoelle@KDDK.com, or contact any member of the KDDK Labor and Employment Law Practice Team.
About the Author
Carrie Roelle, an attorney at Kahn, Dees, Donovan & Kahn, LLP, in Evansville, Indiana, is a member of the KDDK Labor and Employment Law Practice Team and the Litigation and Trial Services Practice Team. Carrie defends employers before state and federal courts, as well as various administrative agencies, in matters involving allegations of discrimination, harassment, interference, and retaliation. In addition to litigation, she participates in counseling employers on employment issues they face each day, including wage and hour compliance, disability issues, workplace policies, and litigation avoidance.
