Does your boss have to pay you overtime if you are paid a salary? It depends, but many times the answer is yes! At least a few times a week, we at El-Hag & Associates, P.C, a Westchester New York labor & employment law firm, receive phone calls from employees who are paid a salary but should be receiving overtime. To make sure you are being paid correctly, here is what you need to know:
What is a salary? Salary is when an employer pays an employee a set wage each week regardless of the hours the employee works. For example, if your employer agreed to pay you $750 per week as a salary, you would receive that salary when you worked 30 hours in the week or if you worked 100 hours a week. The amount of weekly pay does not change based on your weekly work hours.
When does my employer have to pay overtime when I receive a salary? Your employer MUST pay you overtime if you do not fall under an exemption from the Federal or New York State overtime laws. In the legal industry, when an employer pays you a salary, but fails to pay you overtime when you are not exempt, it is called misclassification. This means your employer classified you under an exemption when you should be non-exempt from the overtime laws.
What are the main exemptions from the overtime laws. There are five main exemptions to the overtime law. Because exemptions are a detailed topic, I will only mention them and include links to provide you with additional information, I explain exemptions in other blog posts. The exemptions are as follows:
- Executive Exemption– Learn more here- https://www.dol.gov/whd/overtime/fs17b_executive.pdf
- Administrative Exemption– Learn more here- https://www.dol.gov/whd/overtime/fs17d_professional.pdf
- Outside Sales Exemption– Learn more here- https://www.dol.gov/whd/overtime/fs17f_outsidesales.pdf
- Professional Exemption– Learn more here- https://www.dol.gov/whd/overtime/fs17d_professional.pdf
- Independent Contractor– Learn more here- https://www.dol.gov/whd/regs/compliance/whdfs13.htm.
How is overtime computed when I am paid a salary? Overtime is always computed based on your regular hourly rate. So when you are paid a salary, the first thing you must do is compute your regular rate of pay each week you work. To do this, you must divide your weekly pay and other non-exempt income received that week by the hours you worked in that week. Once you have your regular hourly rate, you simply multiply your regular hourly rate by 1.5 to get your overtime rate of pay. For example, if your salary is $750 per week and you work 50 hours that week, your regular rate of pay would be $15 per hour ($750/50). The overtime rate of pay is $22.50 ($15 x 1.5).
How much am I owed if I was paid a salary, but my employer did not pay me overtime? Your employer will owe you the OVERTIME PREMIUM for each overtime hour that you worked but not paid overtime. The overtime premium is the extra money you are entitled to for working over 40 hours in a workweek. You are not entitled to the full 1.5 X your regular hourly for each overtime hour worked. Why? because your employer paid you the regular hourly rate for ALL hours worked by paying you the salary. But your employer did not pay you the overtime premium of .5x your hourly rate.
For example- in the previous example we said that if your worked 50 hours in a week and you were paid a salary of $750, then your regular rate of pay is $15 and your overtime rate is $22.50. But since you were paid $15 for each hour worked, you are only owed the difference between the overtime rate of $22.50 and your regular rate of pay ($22.50-$15). In this example your overtime premium would be $7.50. Since you worked 10 hours of overtime (50 hours – 40 hours), you would be owed $75.00 in actual wages for the week, not including penalties ($7.50 x 10 hours).
What is the lowest salary an employer can pay? There is no minimum salary an employer can pay, only a minimum wage. Currently, the NYS Minimum Wage in Westchester County is $10 per hour. So if your employer paid you a salary of $360 and you worked 40 hours in the workweek, your employer would have violated the New York State Minimum wage provisions because your employer only paid you $9.00 per hour ($360/40). If your employer pays a salary that falls below the minimum wage, you would be owed the difference between what you were paid and the amount you would have received had you been paid the minimum wage. In this example you would be owed $40 because had you been paid the minimum wage of $10.00 per hour, you would have received $400 that week. And since you were only paid $360, you would be owed the difference between $400 and $360, which is $40.
How do I know if I am misclassified as exempt and should be receiving overtime when I am paid a salary? CALL US!! take a few minutes and call El-Hag & Associates, P.C, and we will be happy to perform a free pay analysis for you. The only other way is for you to research the overtime exemptions and make a judgement call about your employer’s pay practices. This is one of the most common ways employers steal wages. If you have questions, please do not hesitate to call us.
To learn more about your rights under the wage and overtime laws, disability law, discrimination laws, or family & medical leave law, visit:
El-Hag & Associates, P.C
777 Westchester Ave, Suite 101, White Plains, New York, 10604
• http://188.8.131.52 • Jordan@Elhaglaw.com • (914) 218-6190 (office) • (914) 206 -4176 (fax)
** Disclaimer- This blog post is applicable to employees working in NY State. Some of the information is applicable outside of NY State, but you should check the laws of the state in which you work. Additionally, this information is not intended as legal advice. If you have legal questions CALL OUR OFFICE. We do not want you to take any action relying on this information without being fully informed. You need to make sure that your circumstances protect you under the law before you act.