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Do I Have to Pay a Salaried Employee Overtime?

In Pennsylvania as elsewhere in the U.S., employees must be paid 1.5 times their regular rate for working beyond 40 hours in a single week unless they are exempt from overtime laws. This is a simple and straightforward calculation for workers who are paid hourly. But how does it apply to salaried workers and those on more complex compensation structures?

In the first place, certain salaried employees are exempt from overtime under the federal Fair Labor Standards Act (FLSA) and the Pennsylvania Minimum Wage Act. These include:

  • employees engaged in an executive capacity, supervising at least two employees
  • employees engaged in business operations, management policies or administrative training
  • professional employees with duties requiring advanced knowledge and extensive education
  • employees who primarily make sales or take orders outside of the employer’s main workplace

In each of these cases, the employees generally may spend no more than 20 percent of their time performing duties other than those that make them exempt from overtime.

While exempt employees are usually salaried, not all salaried employees are exempt. Federal and state overtime laws are designed to protect workers from being forced to work long hours without additional pay. As such, employers cannot avoid overtime pay simply by classifying an employee as salaried.

Federal law allows a fluctuating work week model for salaried workers whose work week may bounce above or below 40 hours. For these employees, overtime could end up being paid at only half their average per hour rate instead of 1.5 times the amount per hour.

But Pennsylvania law is more generous and supersedes the federal rule. Even if your employee works 30 hours one week and 50 hours the next, you have to pay their full salary for week one and their full salary plus ten hours at time-and-a-half for week two, unless they fall under another overtime exemption.

For questions about best practices related to overtime pay, seek counsel from one of the experienced employment attorneys at Feldstein Grinberg Lang & McKee, P.C. in Pittsburgh. Call 412-301-7395 or contact us online to see how we can help.

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