58 | Classification Guidebook © 2024 Seyfarth Shaw LLP | www.seyfarth.com Are managers obligated to distribute overtime work equitably? (Can we favor high performers over low performers?) From a legal standpoint, an employer can distribute overtime in any manner it desires, as long as it is not done on a discriminatory basis (e.g., more overtime intentionally assigned to males over females, employees of a certain race or ethnicity, etc.) and as long as employees chosen for overtime work are not required to perform such work during times or days that violate their religious beliefs. Within these parameters, overtime can be used as an incentive to reward higher performers. B. FAQ for Questions About Overtime Eligibility and Calculation What is the FLSA? The FLSA, which stands for the Fair Labor Standards Act, is a federal law that outlines requirements related to pay and includes provisions for minimum wage, overtime pay, and equal pay for equal work. This law has certain tests that must be met in order for jobs to be considered “exempt” from overtime requirements. Employees in jobs that do not meet these requirements are considered “non-exempt” and must be paid overtime for all hours worked in excess of 40 hours in a given workweek. The law also requires employers to keep records of hours worked. To be exempt from the payment of overtime, an employee must meet at least one of the various tests of exemption that are based on the employee’s duties, not on their level of compensation and grade. Who determines if a position is exempt or non-exempt? Because of the expertise required to interpret and apply the FLSA, the [Department/Team] is charged with determining the exemption status of all positions. Managers work with their partners in Corporate Compensation when status of a new position needs to be established What is the difference between exempt, non-exempt, and salaried with overtime? Salaried with overtime: Receive their weekly salary for each workweek in which they work, regardless of the number of hours worked, with an overtime premium payment for any hours worked above 40 in the workweek. If the employee works any hours in the workweek, salary may not be docked for full or part day absences except in limited circumstances. (Check with HR Advisor if you have questions). Non-exempt: Paid an hourly rate for hours worked up to 40 in a workweek, and a time-and=onehalf overtime premium for any hours worked over 40. Exempt: Paid a predetermined sum each workweek regardless of the number of hours worked. Salary may not be docked for part day absences, but may be docked for full day absences. What are hours worked for the purposes of computing overtime? Hours worked are only those hours actually worked by the employee. They do not include PTO, family care time, STD, or holidays (unless the employee actually works on the holiday).
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