Do You Qualify for Overtime Pay? How Employers Misclassify Workers

The Fair Labor Standards Act (FLSA) establishes employees’ right to overtime pay under federal law. As the U.S. Department of Labor (DOL) makes clear, “Unless exempt, employees covered by the [FLSA] must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.”

Despite this, many employees do not receive the overtime pay they deserve. Employers often use a variety of tactics to avoid paying overtime—one of which is misclassifying their employees as “exempt” from the overtime provisions of the FLSA.

The Right to Overtime Pay: Exempt vs. Non-Exempt Employees

While most employees are entitled to overtime pay when they work more than 40 hours in a workweek, some are not. The FLSA distinguishes between eligible and ineligible employees by classifying them as “non-exempt” and “exempt,” respectively. If you are non-exempt, you are eligible for overtime pay under the FLSA. If you are “exempt,” you are not.

There are six classes of “exempt” employees under the FLSA. As a general rule, the following employees are not eligible for overtime:

Administrative Employees

Administrative employees are exempt if they receive a salary of at least $684 per week, they exercise discretion and independent judgment regarding “matters of significance,” and their primary duties include, “the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.”

Computer Employees

Computer systems analysts, software engineers, programmers, and “other similarly skilled worker[s] in the computer field” are exempt if they receive a salary of at least $684 per week or a wage of at least $27.63 per hour and their primary duties involve the design, development, analysis, testing or application of computer systems or programs or similar duties requiring similar skills.

Executive Employees

Executive employees are exempt if they receive a salary of at least $684 per week and their role involves all three of the following: (i) their primary duty is managing the company or a department of the company; (ii) they “customarily and regularly” direct the work of at least two other employees; and, (iii) they have the authority to hire or fire other employees, or their recommendations regarding hiring or firing “must be given particular weight.”

Outside Sales Employees

Outside sales employees are exempt if they “customarily and regularly” work away from their employer’s primary place of business and their primary duties involve, “making sales . . . or obtaining orders or contracts for services or for the use of facilities for which . . . consideration will be paid by [a] client or customer.”

Professional Employees

Professional employees are exempt if they receive a salary of at least $684 per week and their primary duties involve either: (i) “the performance of work requiring advanced knowledge . . . which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;” or, (ii) “the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.”

Highly Compensated Employees

Employees who earn at least $107,432 per year and who, “customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee,” are also exempt from overtime under the FLSA.

If you are an employee and you do not fall into one of these six categories, then you are generally eligible for overtime under the FLSA. If you believe that you have been wrongfully denied overtime pay as a non-exempt employee, you should talk to an experienced employment lawyer about your legal rights.

The Right to Overtime Pay: Employees vs. Independent Contractors

Employers also frequently attempt to avoid paying overtime by classifying their non-exempt employees as independent contractors. Since independent contractors are not employees by definition, they are not covered by the FLSA’s overtime provisions. Independent contractors also generally do not qualify for workers’ compensation and other protections afforded to employees under state and federal law.

When deciding whether a non-exempt employee has been misclassified as an independent contractor, the DOL and the courts consider several factors. Some examples of these factors include:

• Whether the worker receives regular paychecks from the employer
• Whether the worker uses the employer’s tools, equipment and materials
• Whether the worker primarily (or solely) works for the employer or also works for other businesses
• Whether the worker has a continuing or indefinite relationship with the employer
• Whether the employer has control over the worker’s job duties and assignments
• Whether the employer has control over how and when the worker’s duties are performed

If a worker chooses his or her own projects or hours and invoices the employer for projects completed or hours worked, the worker is more likely to be properly classified as an independent contractor. Conversely, if a worker receives a regular paycheck and works at the employer’s discretion and direction, the worker is more likely to be properly classified as an employee.

Misclassification of non-exempt employees as independent contractors is particularly common in certain industries. These include construction and commercial transportation, among others. With that said, if you work in any industry and you believe that you have been improperly classified as an independent contractor so that your employer doesn’t have to pay you overtime, you should talk to an experienced employment lawyer about your legal rights in this scenario as well.

Are You Entitled to Unpaid Overtime? Discuss Your Legal Rights with an Experienced Employment Lawyer in PA or NJ for Free

Are you entitled to unpaid overtime? If you believe that you are owed unpaid overtime as a result of being misclassified as an exempt employee or independent contractor, we strongly encourage you to get in touch. Our experienced employment lawyers can determine if you have been misclassified—and, if so, we can take appropriate legal action on your behalf. To schedule a free and confidential consultation at Murphy Law Group, call 267-273-1054 or contact us online today.