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Are salaried employees entitled to overtime pay?

Author:
Harold Averkamp, CPA, MBA

Some salaried employees are entitled to overtime pay. The salaried employees entitled to overtime pay are referred to as nonexempt employees. Nonexempt means that the employer is not exempt from the Fair Labor Standards Act, which requires that salaried employees having a gross salary of less than $455 per week for a 40-hour work week must receive overtime pay when working more than the normal 40 hours.

In addition to the U.S. Department of Labor’s Fair Labor Standards Act (FLSA), the state in which the employer operates will likely have rules regarding overtime pay (and minimum wage). The employer is required to comply with the rules that are more protective of the employees.

In short, an employer cannot avoid paying overtime merely by classifying an employee as “salaried”.

The “standard salary level” of $455 per week is expected to increase on January 1, 2020 to $684 per week. For a full-year employee, this means the current annual amount of $23,660 ($455 X 52 weeks) will become $35,568.

You should refer to both the U.S. Department of Labor (Wage and Hour Division) and your state’s labor department for the complete rules and exemptions regarding overtime pay.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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