An employee can be exempt from overtime pay requirements if three tests are met: (1) the duties test, which regards the nature of the work they perform; (2) a salary-level test, which now means whether they are paid at least $455 per week ($11.38 per hour); and, (3) the salary basis test, which means whether they are paid on a salary basis. Being paid on a salary basis requires that the employee is guaranteed to be paid a salary, the guarantee meaning something more than the employee is just paid the same sum each workweek in practice. This distinction is shown well by the Sixth Circuit's recent decision in Hughes v. Gulf Interstate Field Services.

Tom Hughes and others worked as welding inspectors for Gulf Interstate Field Services on a pipeline-construction project. They were promised "a salary of '$337.00/Day Worked,'" which was to be "paid on days worked." There were additional communications stating that the pay scheme was "based on a 6 day work week @ 10 hours a day (salaried position)." After the fact, a manager for Gulf Interstate asserted that Hughes and the other inspectors were to be paid for six days even if they only worked five, although acknowledging that the workers were not told this up front. As it happened, Hughes and the other inspectors were all paid consistent with the 6 day work week, 10 hours per day at $337.00 per day. 

The key is whether the practice equated with a guarantee, the Sixth Circuit explained: "it is legally significant whether Hughes [and the other welding inspectors] weekly salary was a matter of right or a matter of grace." In other words, the salary basis test would be fulfilled if the welding inspectors were guaranteed the salary from the get-go; that they happened to be paid consistently the same amount during the relatively brief terms of employment did not necessarily establish a guarantee.

What is often referred to as the salaried employee overtime exemption is widely misunderstood, and we've offered a number of previous posts to address at least some of the most common issues:

Is a shift supervisor entitled to overtime pay?

What is the Administrative Exemption to the Overtime Pay Requirement?

Does being paid a salary mean that I don't have to be paid overtime?

Does a job title determine whether an employee is exempt from overtime pay requirements?

What is the "professional" exemption to the overtime pay requirement?

Overtime for the Salaried Employee

Lexington, Kentucky overtime lawyer Robert Abell helps individuals and employees recover the overtime and wages they've earned but not been paid; contact him at 859-254-7076.


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