Many workers assume that because they are paid on a salary rather than hourly basis, they are not entitled to overtime. But this assumption is wrong. Exemption from federal overtime requirements entails both a salary basis test and a duties test. However, for many years employers have been taking advantage of what is often referred to as the “short test” for exempting salaried employees. Under the short test, an employee who receives an annual salary of at least $23,600, was generally considered exempt if the majority of the employee’s duties were exempt (i.e., managerial, professional, administrative . . .). An employee could still seek to invalidate an exemption by showing that he or she spent too much time doing non-exempt work, but for many workers the short test meant an effective assumption (often wrong in our view) that they were exempt from overtime pay requirements.
In 2015 the U.S. Department of Labor proposed a rule significantly increasing the salary threshold for the short test to $50,440. Estimates indicate that when the proposed rule goes into effect as many as five million American workers may be non-exempt and entitled to overtime pay. If your salary is less than this new threshold, you may become entitled to overtime pay for hours worked in excess of 40 hours per week even though you are paid on a salary basis if you spend any significant time doing non-exempt work. For example, an “assistant manager” of a convenience store or fast food restaurant may receive a salary, but will often perform many of the same duties as a minimum wage employee. This person may not be exempt and may be entitled to overtime pay. And if this employee receives a salary of less than $50,440, the test to qualify for the exemption under the proposed rule will be more stringent and could mean that the employee is entitled to overtime pay.
The same is true for many other positions in retail, manufacturing, food service, health care and elsewhere where employees are nominally considered “managers” but do not consistently supervise others and actually do significant amounts of non-exempt work. Employees in such positions may be entitled to recover significant amounts for unpaid overtime pay, including additional sums for “liquidated damages.” If you believe you may have been denied overtime pay to which you were entitled, please contact us for a free review of your circumstances.