Employee classification can be challenging to get right. Many laws, regulations, and cases define who is and is not exempt from overtime.
Employers sometimes fall into the dangerous trap of believing they do not need to pay an employee overtime wages because they pay that employee a salary. That conclusion is wrong. The legal difference is not salaried versus hourly, but exempt versus non-exempt. If a salaried employee is non-exempt, the employer must still pay that employee overtime for any hours over 40 worked in a work week.
Oklahoma’s Overtime Laws
Oklahoma’s overtime law generally follows the federal law regarding overtime pay under the Fair Labor Standards Act (FLSA). Under Oklahoma law, non-exempt employees who work more than 40 hours in a workweek are entitled to receive overtime pay at a rate of one and a half times their regular rate of pay for every hour worked over 40 hours. The Oklahoma law tracks with the FLSA.
Exempt vs. Non-Exempt Employees
Generally speaking, the FLSA requires employers to pay overtime to non-exempt employees who work more than 40 hours per week. Exempt employees, on the other hand, are not just paid on a salary basis, but also must meet one of the FLSA’s statutory exemptions. Being non-exempt and owing overtime is the rule. Being exempt is a special exception.
To be exempt from overtime pay under the FLSA, an employee must meet certain criteria regarding job duties and salary. Specifically, the employee must meet both a salary test and a duties test. The salary test requires that the employee be paid a salary of at least $684 per week ($35,568 per year) and that the salary is not subject to reduction based on the quantity or quality of work performed.
The duties test requires that the employee primarily perform executive, administrative, or professional duties. Certain outside sales employees can also be exempt. And there is an exemption for highly compensated employees.
Simply paying an employee a salary does not automatically make them exempt from overtime pay. To be exempt, the employee must also meet the duties test, meaning if an employee is salaried but does not primarily perform executive, administrative, professional, or outside sales duties, they may still be entitled to overtime pay.
Executive employees primarily manage the business or a department, supervise two or more employees, and have the authority to hire or fire employees.
Administrative employees primarily perform non-manual work related to the management or operations of the business, and whose work requires the exercise of discretion and independent judgment.
Professional employees primarily perform work that requires advanced knowledge in a field of science or learning, and whose work requires the exercise of discretion and independent judgment.
Outside sales employees regularly engage in sales or other transactions away from the employer’s place of business.
Finally, highly compensated employees earn a total annual compensation of at least $107,432, and whose primary duties include performing office or non-manual work.
It is essential for employers to carefully evaluate each employee to determine whether they meet the criteria for exemption from overtime pay. An employer failing to correctly classify employees can result in costly legal disputes and potential liability for unpaid wages, damages, and attorney’s fees. A team of employment attorneys can help you properly classify employees.
When Should Overtime Be Paid?
An employer must pay overtime wages to non-exempt employees for any hours over 40 worked in a workweek. An employee’s workweek is a fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods.
Employers sometimes believe that it is based upon a two-week pay period and may have an employee work 50 hours one week and only 30 the next, thinking no overtime is due. That is wrong. In that case, the employee is entitled to ten hours of overtime, at a rate of 1.5 times their regular rate of pay.
Contact an Experienced Oklahoma Business Attorney
Employee classification can be challenging to get right. Many laws, regulations, and cases define who is and is not exempt from overtime. Further, ensuring that overtime is based on the workweek is also necessary. And calculating an employee’s regular rate of pay for overtime can also be complicated.
For these reasons, hiring an experienced employment attorney can help your business ensure legal compliance and avoid costly and distracting lawsuits.