Overtime Regulations for Exempt Employees as of Dec. 1

Earnings Statement

The new overtime rules under the Fair Labor Standards Act (FLSA) go into effect December 1, but there is still a lot of misinformation about it. One area of confusion relates to highly-compensated and professional employees. Many people believe that these two types of workers are automatically ineligible for overtime benefits. This is not always the case.

In order to be ineligible for overtime, an employee must pass three tests related to income and job duties. These categories are referred to as white collar exemptions.

In the final ruling of the FLSA overtime rules, the Department of Labor states that they are “implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees.” Listed below are the three tests that can make you ineligible for overtime pay if your job falls into the above categories:

  • Salary basis test – You must be paid a predetermined and fixed salary that is not subject to reduction due to variations in quality or quantity of work.
  • Salary level test – You must be paid a salary that meets a minimum specified amount, which will be $47,476 in 2007.
  • Duties test – You must primarily perform executive, administrative or professional duties, each which is defined by FLSA regulations.

The new overtime regulations are expected to benefit 4.2 million workers in the United States, including 392,000 in California. Overtime regulations and exemptions for white collar professionals was revised in the final ruling.

If you feel you have been wrongfully exempted from overtime pay, contact an attorney to discuss your options.

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