Can I Be Paid Overtime if I am a Salaried Employee?

In 2004 new overtime regulations were enacted for salaried employees.    The new regulations provide the following:

  1. Employees who are paid a salary of less than $455 a week ($23,660 a year) must be paid overtime regardless of their job duties and responsibilities.
  2. Employees who are paid a salary of at least $455 a week are exempt from overtime pay requirements if they also meet the following test:
    1. The employee’s primary duty is management of the business or a department or subdivision.
    2. The employee customarily and regularly directs the work of two (2) or more employees.
    3. The employee has the authority to hire or fire other employees or his/her suggestions and recommendations as to promotion, hiring, advancement or any other change of status of employees is given particular weight.

When determining whether a salaried employee’s “primary duty” is management, the employer must look at the principal, main, major or most important duty that the employee performs. If an employee otherwise qualifies for the exemption, his/her concurrent performance of exempt [managerial] and non-exempt work does not disqualify him/her from the exemption.

For example, an assistant manager may perform non-exempt work such as serving customers, cooking food, stocking shelves and cleaning, but his/her “primary duty” may still be management. Employees who spend more than 50% of their time performing exempt [managerial] work generally satisfy the “primary duty” test. An employee who spends less than 50% of his/her time performing non-exempt work may qualify for the exemption, but if he/she is subject to a lot of supervision and his/her pay is little more than a non-exempt employee’s, the likelihood is that he/she will be deemed non-exempt.

Exempt employees generally have the ability to make the decisions when to perform nonexempt duties and remain responsible for the success or failure of business operations under their management while performing the nonexempt work.

An employee satisfies the test of “customarily and regularly” directing the work of others if he/she does so normally and recurrently every workweek and not just occasionally or on isolated or one-time occasion(s).

Finally, the regulations provide that a chef such as an executive chef and sous chef, who has attained a four (4) year specialized academic degree in a culinary arts program, is generally exempt from overtime under a separate exemption for “learned professionals.” This exemption is not available to cooks who perform predominantly routine mental, manual, mechanical or physical work. A chef who has not attained a degree may still be exempt if his/her primary duty requires invention, imagination, originality or talent, such as that involved in regularly creating or designing unique dishes and new items.

What is “Management”?

Generally, management includes, but is not limited to, activities such as interviewing, selecting and training of employees; setting and adjusting their rates of pay and hours of work; directing the work of employees; maintaining production or sales records for use in supervision or control; appraising employees’ productivity and efficiency for the purpose of recommending promotions or other changes in status; handling employee complaints and grievances; disciplining employees; planning the work; determining the techniques to be used; apportioning the work among employees; determining the type of materials, supplies, machinery, equipment or tools to be used or merchandise to be bought, stocked and sold; controlling the flow and distribution of materials or merchandise and supplies; providing for the safety and security of the employees or the property; planning and controlling the budget; and monitoring and implementing legal compliance measures.