Overtime pay is important because it ensures workers get fair pay for long hours. However, understanding who gets overtime pay, especially if you receive a salary, can be tricky. What should salaried employees know about overtime pay?
Who qualifies for overtime pay?
The Fair Labor Standards Act (FLSA) is the federal law that determines who is eligible for overtime pay. Employers must pay non-exempt employees at least one and a half times their regular pay rate for any hours worked beyond the standard 40-hour workweek. This includes many salaried employees.
The law sets an income threshold for overtime pay. Salaried employees who earn more than this amount may not be eligible for overtime pay.
Some salaried employees may be exempt based on their job duties. For example, if you have major managerial duties, like the power to hire and fire, you might not get overtime pay. Also, jobs that need special scientific or academic knowledge often do not qualify for overtime.
The threshold for the salary level test has changed.
The previous threshold was set at $35,568. However, the threshold has recently changed to include millions of additional workers. On July 1, 2024, the threshold increased to $43,888 per year. Another increase will take effect on January 1, 2025, raising the limit to $58,656 per year.
This rule change is set to bring significant benefits to workers, especially those in lower-paid salaried positions. By lowering the salary threshold for overtime eligibility, more workers will qualify for time-and-a-half pay when they work more than 40 hours a week.
Whether or not a salaried employee qualifies for overtime pay hinges on a combination of factors, including their earnings and job duties. Salaried employees should stay informed about their right to overtime pay to ensure that they receive the pay they deserve.