Frequently Asked Questions about Collecting Unpaid Overtime

By Neil E. Klingshirn

Contents


Am I entitled to Overtime Pay?

The general rule is that employers must pay employees at a rate one and one half times that of their regular rate for hours worked in excess of 40 in a week, unless the employer proves that it is not covered by the overtime law or that the employee is “exempt” from overtime.

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Which employers are covered by the overtime laws?

The Fair Labor Standards Act (FLSA), the federal overtime law, covers employers whose enterprise is engaged in commerce and has over $500,000 in annual revenues, as well as employees of any enterprise, regardless of annual revenue amount, who are engaged in commerce or produce goods for commerce.

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What is does it mean that an employee is engaged in commerce or in the production of goods for commerce?

“Engaged in commerce” is a highly defined term that boils down to working on or providing services across state lines. If something you produce ends up in another state, you are probably engaged in commerce and are covered by the federal overtime laws.

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My employer is not covered by the FLSA. Does that mean that I will not receive overtime?

Not necessarily. Some states, such as California, have overtime laws that cover employers who do business solely within that state. State overtime laws can also provide better benefits than the federal overtime law, like overtime after eight hours in a day. Therefore, check on this site or with an employment lawyer in your state to see if your state overtime law will benefit you.

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My employer is covered by both the state and overtime law. Does that mean I will receive overtime?

Not necessarily. Your employer may claim that you are exempt from overtime. Exemption are like an exceptions to the general rule, except that they apply to specific types of employees. There are literally dozens of exemptions from overtime under the federal overtime laws. Since most states adopted the federal overtime exemptions into their own laws, you could be exempted from both state and federal laws.

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I work in an office building. Are there any exemptions that apply to me?

The so-called “white collar” overtime exemptions apply to:
  •     Executive,
  •     Administrative,
  •     Professional, and
  •     Computer Employees
If you perform primarily executive, administrative or professional duties and you are paid a salary of $455 or more a week, you are probably exempt from overtime. If you perform primarily computer duties and are paid $27.63 an hour or more, you are probably exempt from overtime as well.

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Is the Executive exemption to overtime limited to the top two or three people in a company?

Probably not. Executive duties include:
  • managing the business or a portion of it;
  • Directing the work of at least two or more other full-time employees or their equivalent; and
  • Having the authority to hire or fire other employees, or giving your employer suggestions and recommendations as to the hiring, firing, advancement or promotion of other employees.
Store managers who spend more than half of their time doing non-managerial work may still be exempt as an "executive," as long as managing the business of the store is their primary duty.

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What are the duties that qualify for the Administrative Exemption from overtime?

Your duties are "administrative" if your primary duty:

  • is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers; and
  • includes the exercise of discretion and independent judgment with respect to matters of significance.


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Who is covered by the Professional exemption to overtime payment?

Employees covered by the professional exemption include those whose primary duty is the performance of work:
  • Requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction; or
  • Requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
Professionals include learned and creative professionals, teachers, doctors and lawyers.

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What does it mean to be “paid on a salary basis?”

An employee is paid “on a salary basis” if he or she regularly receives each pay period a predetermined amount constituting all or part of his or her compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work he or she performed. The clearest example is a guaranteed salary of, say, $500.00 per week.

The salary may be all or part of the employee's compensation. In other words, additional compensation besides the salary, such as commissions on top of a salary, is still pay “on a salary basis,” so long as the employee receives at least the minimum salary every pay period. For example, guaranteed pay each week of $455 or the amount of commissions earned that week, whichever is greater, is still pay on a salary basis, even if the commission earnings vary each week.

The key to proving a salaried payment where the earnings may fluctuate is an agreement by the employer beforehand to pay the minimum amount of $455 per week. Thus, an employee whose pay is tied solely to production, like commissions or a piece rate, will not be paid on a salaried basis even if he or she more than $455.00 per week. 

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My pay and hours vary from week to week. What is my overtime rate?

Overtime is one and one half times the “regular rate” of pay. Your regular rate of pay is the total amount that you earn during a work week divided by the total number of hours that you worked that week. Therefore, if your pay or hours vary from week to week, so will your overtime rate.

For example, if you earned $700 and worked 55 hours in a week, your regular rate of pay is $12.72 an hour.  If you work 59 hours and earn $725 another week, your regular rate actually drops to $12.35 an hour.

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I earned $800 and worked 50 hours in a week. Does that mean that my overtime rate is $24.00 (1.5 x $16.00 an hour)?

Not necessarily.  If your employer already paid you $16.00 an hour for each hour that you worked, then it would only owe your for the additional $8.00 for the 10 overtime hours, which is the difference between the regular rate and the overtime rate.  That is, since the regular rate of pay is based on the total hours that you work, including your overtime hours, you already received the regular rate for the overtime hours to begin with. Thus, you are owed only the additional “.5" part of the “1.5" overtime rate.

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I am pretty sure that I was not exempt from overtime. How much unpaid overtime can I recover?

The amount of unpaid overtime depends on four factors:
  1. The number of overtime hours that you worked in each pay period;
  2. The amount you earned in each pay period; and
  3. Whether your employer had a good faith, reasonable basis for believing that you were exempt from overtime; and
  4. Whether your employer’s failure to pay overtime was "willful" or not.
The first two factors allow you to calculate the amount of overtime that you should have received when you earned it.  We covered that in the answers to the previous questions. The fourth factor determines the “statute of limitations” that applies to your claim, or the number of years prior to filing suit, either two or three, for which you can collect unpaid overtime. The third factor determines whether the court will double the amount of unpaid overtime that you collect. The double amount is called “liquidated damages.”

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Can I recover anything else?

Yes. If you prevail, the court must award you reasonable attorney's fees. The amount of the attorney fee award is within the court's discretion, however.

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Can you give me an example of how the statute of limitations and liquidated damages work.

Sure. Let’s use three examples. Each one assumes that you were not exempt from overtime.

In the first example, assume that your employer thought that you were exempt and obtained an opinion from the Department of Labor or qualified employment attorney to verify that belief.  In that case, you can collect unpaid overtime for the two years prior to filing suit, but the court will  double that amount as liquidated damages.

Second, assume the same set of facts, except that your employer did nothing to verify its belief that your were exempt. In that case, your employer probably cannot prove that it had a reasonable basis for believing that you were exempt, even if it in good faith believed it was true. In that case, the court should award liquidated damages, or double the amount of the unpaid overtime from the last two years.

Finally, assume that your employer knew that you were not exempt but chose not to pay you overtime in the hopes that it would not get caught or sued for an overtime violation. That violation would be “willful,” so the court would extend the statute of limitations to three years. An employer cannot claim a good faith, reasonable belief that you were exempt if it willfully violated the federal overtime law, so you would receive liquidated damages equal to twice the amount of unpaid overtime.

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What should I do if I believe I am entitled to unpaid overtime?

You should contact an attorney or the DOL quickly, especially if you no longer work for that employer. You can only recover overtime for, at most, the three years prior to filing suit. If you wait 18 months to file suit, you can only recover the remaining 6 or 18 months of unpaid overtime.

You should find out first, whether you are likely exempt from overtime or not and, if not, how much you would be entitled to receive.

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Where can I find more information about collecting unpaid overtime?

Mel has collected Questions and Answers, Wiki articles and Blog articles about non-competition agreements.  Wiki articles include:

If you still cannot find the answer to your question, Ask mel and we will send your question to attorneys in your state.

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I want to consult an employment attorney to explore collecting unpaid overtime. Do you have any suggestions?

You can schedule a consultation with Fortney & Klingshirn you live in Northeast, Central or Southeast Ohio (that is, near Akron, Canton, Cambridge, Cleveland, Columbus, Lorain, Marietta, Youngstown or Wooster Ohio). 

If you live live elsewhere, we suggest that you:
  • search for a lawyer on this site;
  • search the National Employment Lawyer's Association's (NELA) attorney directory;and
  • search the attorney directory of a state affiliate NELA, such as the California Employment Lawyer's Association. To find an affiliate in your state, search for "[State] Employment Lawyer's Association; or
  • consult the general "Bar Association" in your area, which will probably have an attorney referral service. Ask for attorneys who practice employment law; and
Most attorney directories and referral services provide only the attorney's name and contact information. Therefore, you may need to do some more research. As a general rule, the best employment attorneys:
  • Write and speak on employment law topics;
  • Are recognized by their peers (for example, Super Lawyer and "AV" ratings); and
  • Are Board Certified in employment law in those states that offer specialty certification.





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Have an Employment Law question?

Contact Neil Klingshirn

Neil Klingshirn
AV rated Super Lawyer and Employment Law Specialist
Independence, OH
Phone: 216-382-2500