According to the Fair Labor Standards Act, employers who conduct business with at least $500,000 in annual dollar volume of business must pay overtime to non-exempt employees -- those eligible for overtime under the act. Some employers who do not meet the aforementioned test may have to pay overtime to non-exempt employees if they participate in interstate commerce. The most important distinction for an employee is whether he is falls into either the exempt or non-exempt category.
The Fair Labor Standards Act
The U.S. Department of Labor regulates the Fair Labor Standards Act, or FLSA. This act defines who requires paid overtime and who is exempt. In addition to the definitions of exempt and non-exempt employee status, this legislation also provides a list of industries that may not need to comply with either the minimum wage or the overtime requirements provided by the act. Some of the industries which may be exempt include certain seasonal amusement park employees, farm workers employed on small farms requiring less than 500 man hours of labor per calendar year, seamen employed on foreign vessels, employees engaged in fishing operations, small newspapers and newspaper delivery people.
For classification as an exempt employee, your daily job duties and earnings must first meet a test pre-determined by the Department of Labor. The Department of Labor determines exempt status primarily on earnings. If an employee earns $455.00 per week, or $23,600 per year, he is exempt under the FLSA. This exemption makes him ineligible to earn overtime pay. Generally, those who conduct the majority of their business outside of an office, such as outside sales people, and certain computer technicians are exempt, regardless of their income level.
Non-exempt employees earn less than $455 per week or $23,600 per year and qualify for overtime pay. The FLSA requires employers to pay premium pay for overtime accrued by these individuals. Premium pay, as defined by the FLSA, is pay equal to time and a half of regular pay. Non-exempt employees often fall into the category of what are known as "blue-collar" jobs. However, some administrative assistants may qualify for overtime pay if their salaries do not meet the $455 per week test.
Although the FLSA does not require companies to pay overtime to employees who earn more than $455 per week, many companies do. For example, production workers at Bridgestone Firestone manufacturing who earn upwards of $23 per hour are non-exempt and earn time and a half for hours worked over 40 hours in any given work week. Clearly these employees exceed the test suggested by the Department of Labor, but the company provides this pay regardless of the law to recruit and maintain a skilled workforce. Many companies do this to prevent possible unionization of facilities and to maintain employee morale at their facilities.