Written by Sattiraju Law Firm on January 20, 2020
There is no greater confusion in employment law than whether a salaried employee is entitled to overtime. Ask 10 people on the street, and 9 will claim that salaried employees are not eligible for overtime pay, which is simply not true. We will explain this issue in further detail below.
What Does it Mean to Be “Salaried”?
Many workers are paid an hourly wage. For one hour worked, they might receive $12. If they work 40 hours in a week, they earn $480. If the next week they work 30 hours, they earn $360.
Other employees are salaried. This means that they are paid a fixed amount every month or every year. In theory, salaried employees don’t have to work 40 hours a week; they only must work as much as they need to get their work done. In practice, employers usually require that salaried employees keep regular business hours and most full-time salaried employees work between 32 and 40 hours.
What is an “Exempt” Employee?
Under labor laws, all non-exempt employees are eligible for overtime pay. In New Jersey, an employee must be paid 1.5 their regular rate of pay for all hours worked over 40 in a week. If a worker is exempt, then they are not subject to the overtime laws.
Are Salaried Workers Exempt?
Some salaried workers are exempt. This is the source of the confusion. Many people assume all salaried employees are exempt, which is false.
Instead, to be exempt, a worker must meet the following:
- Earn a salary of at least $684 a week, which works out to $35,568 a year
- Perform certain executive, professional, or administrative duties
As you can see, it is not enough simply to be salaried. A salaried worker must also earn a minimum amount and perform a certain type of job to be exempt. Otherwise, the salaried employee is non-exempt and should be paid overtime.
Examples of Exempt vs. Salaried Employees in New Jersey
Let’s look at some examples to make this clear:
- Samantha earns a salary of $50,000 for her job as a college professor. Some weeks she works well over 40 hours, but Samantha is exempt from overtime. Why? Because she earns more than $684 and her job as a professor qualifies her as exempt.
- Michael earns a $40,000 salary to pump gas at a service station. He works 50 hours one week and should be paid overtime because his job is not of the sort that is exempt.
- Tyler is a part-time professor paid $30,000 a year. He is non-exempt from overtime for those hours worked over 40 in a week. Although he has a professional job, he earns less than the threshold, so he cannot be exempt.
If you are salaried, do not assume you do not qualify for overtime compensation. Reach out to an employment lawyer in New Jersey for help analyzing your case.
At Sattiraju Law, our lawyers have brought many successful claims for compensation. You can schedule your consultation with a member of our team today.