exemption

3 Common Overtime Mistakes

overtime_pay

The federal Fair Labor Standards Act (FLSA) regulates the payment of overtime. Here are three common overtime mistakes:

Mistake #1: Misclassifying employees – some employers classify workers as independent contractors to escape liability for overtime wages. Courts look at whether an individual is “economically dependent on the business to which he renders service or is, as a matter of economic fact, in business for himself,” and they use a variety of factors to determine whether an individual is an employee or independent contractor.

Mistake #2: Exemption confusion – Paying an employee a salary does not necessarily make him exempt from overtime wages. Most employees who are exempt from overtime fall under the executive, administrative, or professional exemptions (also known as the white- collar exemptions), which require payment on a salary basis. However, for the white-collar exemption to apply, an employee must meet the duties test and be paid a minimum salary of $455 per week.

Mistake #3: Calculating the regular rate – employers should make sure to properly calculate employees’ regular rate of pay. Overtime is calculated at 1.5 times an employee’s regular rate for all hours worked in excess of 8 hours up to and including 12 hours in any workday and for the first 8 hours worked on the seventh consecutive day of work in a workweek. Further, double overtime is calculated as 2 times the employee’s regular rate of pay for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of 8 on the seventh consecutive day of work in a workweek. However, an employee’s regular rate is not necessarily the same as the hourly rate. If an employee’s only compensation is his hourly rate, the regular rate is the same as his hourly rate, and the overtime rate is 1.5 or 2 times that amount. If you provide any compensation over and above straight hourly wages, make sure you calculate any bonuses or compensations which must be included in the calculation of the regular rate.

The Law Offices of Payab & Associates is a Los Angeles based law firm with more than 17 years of experience in employment cases. Our office has successfully litigated many complex disputes including wrongful termination, sexual harassment, racial discrimination, wage and labor disputes, and retaliation cases.

Do you have any questions about your overtime wages? Contact the Law Offices of Payab & Associates @ (800) 401-4466 or visit http://employmentlawyersla.com/

Which type of employees are not required to be paid overtime?

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There are entire classes of employees who are not required to be paid overtime. The most common exemption is the administrative exemption.

Administrative exemption is commonly referred to as the “white collar” exemption. To qualify for the administrative exemption, the employee must meet both the salary requirements and the duty requirements.

Salary requirements:
(a) The employee must be paid on a salaried basis.
(b) That salary must be equal to or greater than $455 per week. Note: this amount may be higher based on state laws.

Duty requirements:
(a) Have primary duties—not merely occasional duties—that are related to the management or general operations of the business. Typically this includes roles in finance, accounting, marketing, purchasing, legal, HR, and other such roles.
(b) Use discretion and independent judgment. This means the employee has a level of responsibility that requires him or her to make judgments independently, not merely to follow standards or take direction. The discretion and independent judgment must be related to matters of significance within the organization.

It’s easy to misclassify an employee. Some important notes to know:
– The employee’s job title would imply they are exempt, but their duties don’t actually qualify. Matching job titles or job descriptions is not enough; the actual work performed is what matters.
– The employee works on items that would qualify, but they’re not his or her primary duties. Each situation needs to be reviewed individually.
– The primary duties would qualify, but there is little to no discretion and independent judgment on the part of the employee. For example, if an employee primarily performs administrative duties but relies almost exclusively on either set standards or on the direction of a superior to make any decisions, then that employee may not be exercising discretion and independent judgment in the role. In these cases, it does not matter that the duties would qualify—if the “discretion and independent judgment” requirement is not met, the employee is not exempt.

Read More: http://goo.gl/oNFC0W

The Law Offices of Payab & Associates is a Los Angeles based law firm with more than 17 years of experience in employment cases. Our office has successfully litigated many complex disputes including wrongful termination, sexual harassment, racial discrimination, wage and labor disputes, and retaliation cases.

Questions about your rights at the workplace? Contact the Law Offices of Payab & Associates @ (800) 401-4466 or visit http://employmentlawyersla.com/