Be Wary of Overtime Rules for Salaried Employees

November 9, 2010

Most employers understand the need to pay time and a half for hourly workers who work in excess of forty hours per week. However, many people think that salary based employees are exempt from these requirements. Many businesses follow the logic that salaried employees are paid a salary to do their job and they need to take the amount of time necessary to get the job done.

In North Carolina, that can be a dangerous mistake. Being a salaried employee does not exclude employers from paying overtime requirements unless that employee is exempt. Under the North Carolina Wage and Hour Act, an employer can be subject to liquidated damages equal to double the overtime amount found to be due if the employee unless the employer can show that any violation was in good faith and that the employer had reasonable grounds for withholding the pay. A court can also order that the plaintiff’s attorney fees be paid. It also bears mentioning that the opposite does not necessarily apply. Even if an employee would be exempt, generally if they are not salaried or paid on a flat-fee basis, overtime must be paid.

Exempt employees must have a guaranteed salary of $455.00 per workweek – this is why hourly employees are generally not exempt, their salary is not guaranteed – and fit into a specific category of exemption, as defined by the federal Fair Labor Standards Act. The primary categories consist of executive (supervisory) employees, administrative employees, and certain professional, outside sales, and computer employees. The importance of the job or the skill level involved is often not dispositive as to whether overtime must be paid. Law firms deal with this issue every day as paralegals — despite their tremendous importance to any law firm — are not exempt employees.

Business owners, be careful about having your salaried employees work over 40 hours per week and consider guaranteeing a minimum salary of $455.00 to your hourly employees who operate in a supervisory or administrative capacity. Contact Maginnis Law for an initial consultation regarding whether or not your employees qualify as exempt and to discuss options if you have been contacted by the North Carolina Wage and Hour Division. Maginnis Law, PLLC is a Raleigh business litigation law firm with clients from all over the Triangle area, including in Apex, Cary, Holly Springs, and Wake Forest. Contact the firm at 919.526.0450 or send an email to emaginnis@maginnislaw.com to discuss issues with the Fair Labor Standards Act and the North Carolina Wage and Hour Act.

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