So you worked over 50 hours last week to pay off some debt and you can’t wait for that overtime check? You are probably under the impression that your employer has a legal obligation to compensate you extra for your overtime hours. Not so fast. People often make the mistake of thinking that overtime pay is required by law for all employees. But the reality is that not every employee is eligible for overtime pay. Both federal and state employment laws carve out a number of exceptions that deny overtime compensation to many of the approximately 150 million employees in the workforce today. These exceptions are narrowly tailored, so it is important to understand the conditions that trigger the exceptions.
The Fair Labor Standards Act (FLSA) is the driving force behind U.S. employment laws. The FLSA mandates that no employer shall employ any of its employees who in any workweek is engaged in interstate commerce or in the production of goods for interstate commerce, or is employed in an enterprise engaged in interstate commerce or in the production of goods for interstate commerce, for a workweek longer than 40 hours unless such employee receives compensation for his or her employment in excess of 40 hours at a rate of not less than 1 1/2 times the employee’s regular rate of pay. For purposes of the overtime pay provision, an “employer” includes any person acting directly or indirectly in the interest of an employer in relation to an employee; and an “enterprise engaged in interstate commerce or in the production of goods for interstate commerce” means an enterprise that:
(1) (a) Has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling or otherwise working on goods or materials that have been moved in or produced for commerce by any person; and
(b) Is an enterprise whose annual gross volume of sales made or business done is not less than $500,000.00 (exclusive of excise taxes at the retail level that are separately stated);
(2) Is engaged in the operation of a hospital; an institution primarily engaged in the care of the sick, the aged, or the mentally ill or defective who reside on the premises of such institution; a school for mentally or physically handicapped or gifted children; a preschool, elementary or secondary school; or an institution of higher education (regardless of whether or not such hospital, institution or school is public or private or operated for profit or not for profit); or
(3) Is an activity of a public agency.
Employees or employers who do not fall under the purview of the FLSA overtime laws are not necessarily exempt from overtime regulations. Rather, it is important that they look to their state employment laws. Some states have enacted their own overtime laws that require a different rate of overtime pay than required under FLSA. When an employee is subject to both state overtime laws of these states and the federal overtime laws, the employee is entitled to overtime according to the standard that will provide the higher rate of pay. Missouri and Illinois have enacted overtime compensation laws that are nearly identical to the FLSA and require overtime pay at a rate of not less than 1 1/2 times an employee’s regular rate of pay after 40 hours of work in a given workweek.
There are important exceptions to both federal and state overtime laws that render many employees ineligible for overtime pay. For example, Section 213 of the FLSA exempts the following classification of employees, among others, from the overtime pay requirements:
(1) Executive, administrative and professional employees (including teachers and academic administrative personnel in elementary and secondary schools), outside sales employees, and certain skilled computer professionals
(2) Employees of certain seasonal amusement or recreational establishments
(3) Employees of certain small newspapers, and switchboard operators of small telephone companies
(4) Employees engaged in newspaper delivery
(5) Farm workers employed on small farms that used no more than 500 “man days” of farm labor in any calendar quarter of the preceding calendar year
(6) Casual babysitters and persons employed as companions to the elderly or infirm
(7) Certain commissioned employees of retail or service establishments
(8) Auto, truck, trailer, farm implement, boat or aircraft salespersons employed by nonmanufacturing establishments primarily engaged in selling these items to ultimate purchasers
(9) Railroad and air carrier employees, taxi drivers, certain employees of motor carriers, seamen on American vessels, and local delivery employees paid on approved trip rate plans
(10) Announcers, news editors and chief engineers of certain nonmetropolitan broadcasting stations
(11) Domestic service workers who reside in their employer’s residences
(12) Employees of motion picture theaters
These employees are not entitled to overtime pay regardless of how many hours they work. And state employment laws are generally no more lenient. In fact, states with overtime laws typically use the FLSA exemptions as a guideline for their own exemptions. For instance, with the exception of employees who work for seasonal amusement or recreational establishments, Missouri has explicitly adopted the FLSA overtime pay exemptions. In addition, the Illinois exemptions, although somewhat different, rely in large part upon the FLSA.
Under certain circumstances — prescribed under Section 207(o) of the FLSA — employees of state or local government agencies may receive compensatory time off at a rate of not less than 1 1/2 hours for each overtime hour worked in lieu of cash overtime pay. An employee falling under this Section must be permitted to use compensatory time on the date requested unless doing so would “unduly disrupt” the operations of the agency. With minor distinctions, states such as Missouri and Illinois adhere to this rule as well.