Oklahoma Business Law: If my employees are “salaried”, do I need to pay them overtime?

Q: If my employees are “salaried”, do I need to pay them overtime?

A: The short answer is Yes, even salaried employees are entitled to overtime pay. Overtime must be paid at a rate of at least one and one-half times the employee’s regular rate of pay for each hour worked in a workweek in excess of the maximum allowable in a given type of employment. Generally, the regular rate includes all payments made by the employer to or on behalf of the employee (except for certain statutory exclusions). A salaried employee who is not “exempt” from the overtime requirement must be paid overtime.

Posted by Shawn Roberts

On this blog, I write about and try to answer practical Oklahoma legal questions. My focus and most experience is in estate planning and business issues including Oklahoma non-compete law. I make a living as an attorney in the law firm I founded, Cazes Roberts, PLLC in Oklahoma City. I live in Edmond with wife Amy and my two children, Sam (17) and David (9). We live precisely in the path of where the "wind comes sweeping down the plains."

4 comments

Matt Johnson

Shawn,

Thanks for the post. Great information!

Keep up the good work. I really enjoy your blog.

Matt

shawnjroberts

Thank you Matt, appreciate you taking the time to comment!

Shawn

Matt Johnson

Shawn,

What would make a salaried employee “exempt” from the overtime pay requirement?

shawnjroberts

Matt,

I appreciate the question, it is nice to know there is someone out there reading my blog. There are several ways a salaried employee could be exempt, all of them include meeting the requirements of one of the FLSA exemptions from overtime requirements some of the exemptions also apply to minimum wage). The most prominent exemptions are:

Business Owner
It is so simple that it is initially often missed. If you are an employee who owns at least a bona fide 20-percent equity interest in the enterprise in which employed, regardless of the type of business organization, and are actively engaged in its management, you are excluded from the FLSA as an “executive”.

Computer Professionals
An Employee who primarily performs work as a computer systems analyst, programmer, software engineer or similarly skilled work in the computer field. Examples: system analyst, database analyst, network architect, software engineer, programmer.

Executive
An Employee whose primary duty is to manage the business or a recognized department/entity and who customarily directs the work of two or more employees. Also includes individuals who hire, fire or make recommendations that carry particular weight regarding employment status. Examples: executive, director, owner, manager, supervisor.

Administrative
An Employee whose primary activities are performing office work or non-manual work on matters of significance relating to the management or business operations of the firm or its customers and which require the exercise of discretion and independent judgment. Examples: coordinator, administrator, analyst, accountant.

Professional/creative
An Employee who primarily performs work requiring advanced knowledge/education and which includes consistent exercise of discretion and independent judgment. The advanced knowledge must be in a field of science or learning acquired in a prolonged course of specialized intellectual instruction. Examples: attorney, physician, statistician, architect, biologist, pharmacist, engineer, teacher, author, editor, composer, musician, artist.

Commissioned sales employees
An Employee of retail or service establishments are exempt from overtime if more than half of the employee’s earnings come from commissions and the employee averages at least one and one-half times the minimum wage for each hour worked.

Highly Compensated
This is for an employee earning at least $100,000 per year, again with a minimum salary of at least $455 per week, and performs one of the duties of an exempt executive, administrative, or professional employee.

Outside Sales
This is for your sales positions where the majority of time is off your company premises soliciting sales, customer orders, and contracts. This exemption does not have a minimum salary requirement. So you have the option of having a 100% commissioned outside sales force if you want, without endangering their exempt status.

If employee meets the requirements under one of these exemptions, it is likely the employer will not have to pay overtime.

Shawn