In most cases, the Fair Labor Standards Act (FLSA) requires that employees be paid at a rate of 1.5 times their regular rate for any hours worked over 40 in a work week. However, it does allow employees in certain professions to be exempt from overtime, meaning they don’t have to be paid extra for working more than 40 hours in a work week. But it is important to look beyond job titles and duties to determine if an employee is exempt from overtime because the Department of Labor (DOL) requires exempt employees to meet a two-part test.
Considering job duties is important when it comes to so-called “professional” employees. There are many positions the average person would consider to be “professional,” but that doesn’t mean that those positions are exempt from overtime. According to the FLSA, to qualify for the Professional Exemption, a person’s “primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment.”
Part Two: Compensation
Ok, so say you are trying to place an engineer in a contract position. The client wants to pay this person on an hourly basis, but they don’t want to pay overtime. Is this OK?
On the face of it, you may say yes because an engineer’s work requires advanced knowledge, is primarily intellectual, and requires discretion and judgement. But remember, job duties are only one part of a two-part equation. Part two has to do with how the employee is compensated. In order to qualify for the Professional Exemption, the contractor must be paid on a salary or fee (NOT hourly) basis and must be paid at least $455 per week. If the client plans to pay the engineer on an hourly basis, that engineer will not meet the Professional Exemption requirements and must be paid overtime for hours worked over 40 in a week.
Correctly classifying “professional” employees as exempt or nonexempt from overtime can be tricky, but luckily, the DOL provides a fact sheet that outlines the requirements for the Professional Exemption. Not only can this fact sheet help you better understand the requirements, but it can also be help you educate clients who resist your efforts to properly classify contractors.
This article is for informational purposes only and should not be considered legal advice.