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Overtime Pay and Exemption Status: What Employers Need to Know

#512attorney #LynchLaw #Lynchpintoyoursucess Dec. 6, 2022

In Texas, labor laws regarding overtime are outlined by the Fair Labor Standards Act or FLSA. The FLSA establishes wage and hour laws at the federal level. FLSA regulations define an "exempt employee" as a worker who is not entitled to be compensated for working more than a 40-hour week and a "non-exempt employee" who is eligible to receive overtime pay. When determining if an employee is entitled to overtime compensation, the FLSA differentiates between exempt and non-exempt employees. 

Exempt Employees vs. Non-Exempt Employees


Employees are considered exempt and not entitled to overtime pay when included in one of several categories for this status as defined by the FLSA. For example, exempt employees are generally salaried and are included in the executive, administrative or professional categories. Those in the exempt category often perform roles within the organization that is crucial to daily operations, and their responsibilities usually require an advanced degree. Positions within the organization that fall into the exempt category often include those who are a member of the 

  • Executive Staff

  • IT Department

  • Administrative Team

  • Outside Sales Force


The FLSA's overtime pay laws cover non-exempt employees, and they are entitled to overtime compensation. When employees included in this category work more than 40 hours in a workweek:

·      They must be paid at least one and one-half times their regular pay

·      They must be paid within the applicable pay period.

Overtime Regulations 

·      The U.S. Department of Labor

·      The U.S. Department of Labor defines a work week as 168 hours

·      A work week is seven consecutive 24-hour periods that can begin on any day and time.

·      The Fair Labor Standards Act

According to the Fair Labor Standards Act, non-exempt workers must be fairly compensated for the extra hours they work on a workweek basis. 

·      The work week does not have to coincide with the calendar week

·      The work week may begin on any day and at any hour.

·      Overtime pay earned in a particular workweek must typically be paid on the regular payday for the pay period in which the wages were earned.

·      Employers are not permitted to average the number of hours over two or more weeks.

·      The Act does not limit the number of hours employees aged sixteen and older may work in any work week.

·      The Act does not require overtime pay for work on Saturdays, Sundays, or holidays unless the employee worked overtime on those days.

How is Overtime Pay Calculated?

Overtime pay is one-and-a-half times the non-exempt employee's regular pay rate. Overtime pay must be paid when the employee works more than 40 hours per week. While this federally mandated directive seems straightforward, many employers are not in compliance for two reasons: 

  1. Employers incorrectly calculate the amount of overtime pay that is due.

  2. Employers misclassify a non-exempt employee as an exempt employee.

Employers Have the Burden of Proof that an Employee is Exempt

The burden of proof that a worker is exempt from overtime pay is the business owner's responsibility. Employers must understand which employees are exempt and how to qualify each employee. State laws can further complicate the exempt vs. non-exempt classifications when, for example, an employee’s age is factored into the equation. 

How Employers Can Ensure Compliance

The federal laws that address overtime rules can be complicated. If you are an employer and need assistance deciphering the rules and regulations regarding your employee’s status, contact the attorneys at the Lynch Law Firm now. To ensure compliance and avoid the risk of a lawsuit, employers with questions can schedule a free consultation with the labor and employment law experts at the Lynch Law Firm. 

About Attorney Natalie Lynch

Natalie Lynch is the founding attorney of the Lynch Law Firm, and she works especially in labor and employment law. Natalie is also a credentialed investigator and dispute resolution mediator with the experience required to help business owners minimize employment risk factors. She is the only consulting and credentialed investigator in Central Texas who conducts third-party investigations into allegations of harassment, discrimination, hostile work environment, and other issues. 

The Lynch Law Firm Team Will Navigate Your Legal Issue from Inception to Resolution 

Suppose you have questions about the federal labor laws that apply to overtime compensation or a labor and employment law issue. In that case, our team of attorneys at the Lynch Law Firm has the experience and expertise to help you find a resolution. The Lynch Law Firm can also assist you with the following:

·      Workplace Investigations

·      Anti-Harassment Training

·      Employee Manuals

·      Performance Evaluation Materials

·      Employment Contracts

·      Legal Agreements for Non-disclosure, Non-compete, and Severance

Call the Lynch Law Firm for a Free Consultation

Call us at the Lynch Law Firm to schedule a free consultation now. Together you can discuss labor and employment issues in the workplace and how to avoid problems before they happen. Contact the firm's founding member, Natalie Lynch, by calling her at 512 298-2346 or emailing her