The Fair Labor Standards Act (FLSA) regulates overtime pay for a large number of employees in the United States. Certain employees must receive additional compensation for working more than a full workweek. If an employer fails to pay an employee the correct amount of overtime pay, s/he may have violated that employee’s rights. Eligibility is confusing; learn more about the overtime rule on salary for exempt highly compensated employees in North Carolina here.

If you have not received the overtime pay your employer owes you, the team at Gibbons Leis, PLLC can help. Our staff works tirelessly to make sure that North Carolina employees receive fair treatment under the law. Give us a call to discuss your case: 704-612-0038.

What are the federal overtime laws?

According to North Carolina and federal law, employees are entitled to a minimum wage of $7.25 per hour for all hours worked in a regular 40-hour workweek (seven consecutive days). Employees who work beyond 40 hours may be eligible for overtime pay. Overtime pay is equivalent to 1.5 times the employee’s regular rate of pay.

Unfortunately, not all employees are eligible for overtime pay. Many employees are exempt under Section 13(a)(1) of the FLSA.

Who is exempt from overtime pay?

Generally, employees that are exempt must:

  • Earn at least $455 per week or $23,660 a year
  • Be paid on a salary basis: Employees paid on a salary basis are not subject to a reduction in pay due to the quality or amount of work performed. They will generally receive a fixed amount of pay on a fixed schedule (e.g., weekly, bi-weekly, monthly) regardless of hours.
  • Perform executive, administrative or professional job duties

The FLSA lists the following categories of employees as exempt:

  • Executive (e.g., CEOs, directors, supervisors)
  • Administrative (e.g., executive assistants to CEOs, those supporting business operations)
  • Professional (e.g., doctors, architects, professors)
  • Outside sales (e.g., salespeople making sales away from the employer’s place of business)
  • Certain computer employees (e.g., computer programmers, software engineers)

There is also one special, and sometimes overlooked, exemption for “highly compensated” workers.

Highly-Compensated Workers Exemption

To qualify for the highly compensated overtime exemption, workers must meet the following requirements:

Wage Requirements

Under the FLSA, a highly-compensated worker must receive a certain amount of compensation over the course of 52 consecutive weeks. Unless the employer specifies a time period, the period will default to a calendar year. Highly-compensated employees must:

  • Receive at least $455 a week;
  • Receive wages on a salary basis (earning the same base salary every pay period); and
  • Receive a minimum of $100,000 in total annual compensation.

The total annual compensation may include various forms of earnings including:

  • Commission
  • Nondiscretionary bonuses
  • Other nondiscretionary compensation

Employees who fail to meet these criteria may still be exempt if employers use prorating or make-up payments

Prorating

Employees employed for less than the 52-week period may still be “highly compensated” under prorating rules. If an employee’s earnings are a prorated portion of the $100,000 annual salary requirement, e.g., employee only works 40 weeks a year, receives a portion of the $100,000 equal to his/her 40 weeks of work.

Make-up Payments

In certain cases, employers may also make an additional payment during the last pay period or within one month after the 52 weeks end to put an employee over the $100,000 annual requirement.

Job Duties

In addition to the salary requirements, a highly-compensated employee’s on-the-job duties must include:

  • Performing non-manual labor (e.g., office work)
  • Regular performance of executive, administrative, or professional job tasks
  • Customarily and regularly performed work

Executive

Executive job duties require the employee to work in a supervisory capacity on a regular basis. This means that the employee must monitor, manage, or supervise the work of a minimum of two other employees as a normal, recurrent part of his/her job.

Employees with the power to hire, fire, or otherwise change another employee’s status may also meet the job duty criteria for an overtime exemption.

Administrative

In order to be exempt from overtime pay, employees performing administrative tasks must contribute on a regular basis to the general business operations of the employer. These employees must use their own discretion to make significant decisions in the workplace.

Professional

Employees performing professional job tasks may be exempt if their work requires advanced education, knowledge, and skill. Learned professionals must have advanced knowledge in an intellectual field such as science. Creative professionals must perform tasks involving original and artistic skills and talent.

Customarily and Regularly

If the employee performs the above-mentioned tasks on rare occasion, that is not enough to qualify as exempt. In order to be exempt, the employee must perform the work repeatedly during the workweek.

Highly-compensated employees generally make over $100,000 a year. As a result, they may be less likely than other employees to question their exempt status. However, just because you make enough money to qualify under the exemption, does not mean you qualify as exempt. There are many criteria you must meet to be ineligible for overtime pay.

Note: An employee may qualify for the highly compensated work exemption even if s/he does not make $100,000. If the employee makes $455 a week and passes the highly compensated employees’ job duties test, s/he qualifies as exempt.

Phil Gibbons, Charlotte, NC employee rights lawyer, can help highly compensated employees recover unpaid overtime.

Due to the complex nature of overtime laws, it is in your best interest to speak to a qualified Charlotte overtime misclassification attorney about your exemption status. Many employers have intentionally or mistakenly classified their non-exempt employees as exempt. These employees were robbed of the overtime pay they rightfully earned. Do not allow yourself to become one of these employees.

Contact Gibbons Leis, PLLC at704-612-0038 to learn more about your exemption status. If your employer has misclassified you as exempt, we can help you recover the overtime pay you deserve.