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Salaried Workers May Qualify For Overtime Pay
Posted by: O'dell
April 23, 2010

Many people incorrectly assume that simply because they're paid a salary, they're not entitled to overtime pay. The common misconception is that by taking a salary, a worker waives the right to overtime pay. However, under California law, there are a whole variety of factors that determine when someone is entitled to overtime pay-and, believe it or not, whether or not someone is paid a salary instead of hourly is usually irrelevant!

If you find yourself in a salaried position where you spend most of your time performing mundane, repetitive tasks that do not require you to use independent judgment or discretion (or if your discretionary judgments have to be reviewed and approved by a superior), then you in fact may be entitled to overtime pay.

Section 510 of the California Labor Code tells us: "Eight hours of labor constitutes a day's work. Any work in excess of eight hours in one workday and any work in excess of 40 hours in any one workweek... shall be compensated at the rate of no less than one and one-half times the regular rate of pay for an employee."

Did you notice that it does not say "for an hourly employee"? That's because whether someone is paid hourly or by salary is not the test. In fact, the California cases that have decided that salaried workers are entitled to overtime pay have crafted a formula for determining what a salaried employee's hourly rate is, so that overtime pay can be calculated.

Here's an imaginary example: Sally is employed as an "Administrative Assistant." She spends the majority of her time answering phones, inputting data into Outlook calendars, typing emails and letters, faxing and filing. She receives a salary, but she has no power to hire or fire anyone and all of her discretionary decisions must be approved by her supervisor. Most likely, Sally is entitled to be paid for her overtime. If she arrives early, leaves late, works on weekends, or works through lunches and rest breaks, she may be working in excess of eight hours per day or 40 hours per week.

In most instances, the factor that makes a difference is the kind of work that is being performed. So, for example, if a salaried supervisor is performing the exact same duties as the hourly workers he or she supervises, then chances are the supervisor is entitled to overtime, just like the hourly workers. In fact, if the supervisor spends less than 50% of his or her time performing "manager" or "supervisor" duties, then he or she stands a good chance of being eligible for overtime.

Likewise, people in positions with technical names, such as "Tech Writer," "Compliance Engineer," "Claims Adjuster," "Account Manager" and the like, may be spending most of their time performing duties that require them to be paid overtime. Under California law, the title of the position means nothing. It's the duties that are actually performed that determine if someone should be paid for overtime.

The exceptions to the "eight hours per day or 40 hours per week" rule generally pertain to people who work in "learned professions" (e.g., lawyers, doctors, architects), those who are charged with actually running a business, such as company executives, and those who can act for the business based solely on their own independent judgment and discretion.

Different rules also apply to people in the computer software industry and the entertainment business. People covered by a collective bargaining agreement (union members) typically are governed by the agreement, rather than the Labor Code. Other than those few exceptions, most people are protected by the wage and hour laws that the Legislature has enacted.

Our firm has successfully litigated many overtime cases on behalf of diverse classes of workers that included salaried individuals. Every case is different, but if you're a salaried employee, even if you think it's a close call, it could be well worth your time to discuss your situation with a wage and hour attorney and find out if you, too, are entitled to overtime compensation.

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