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Are companies required to pay overtime to employees classified as salaried nonexempt? If so, how is overtime calculated?

​Yes. An employee can be classified as nonexempt and be paid on a salary basis, but the employee will remain subject to the Fair Labor Standards Act (FLSA) overtime requirements. These employees are commonly referred to as "salaried nonexempt." Salaried nonexempt employees must still receive overtime in accordance with federal and state laws.

Although there are cases where the employer may opt to pay a nonexempt employee on a salary basis instead of an hourly wage, such an arrangement typically is advantageous only for the employee. Employers are not relieved of the obligation to track hours worked for nonexempt employees paid a salary and must continue to pay overtime as required. In some environments where overtime is very rare and timekeeping is very simple, a salary may be administratively easier; however, employers should not make the false assumption that paying a salary means an employee does not have to keep records of actual hours worked. Even very small amounts of overtime hours and unauthorized overtime must be tracked and compensated for all nonexempt employees.

To calculate overtime for a salaried nonexempt employee with a fixed schedule, first determine the employee's hourly rate. For example, a receptionist who earns $36,000 per year earns the equivalent of $17.30 per hour, based on a 40-hour workweek. The overtime rate for salaried nonexempt employees is the same as for hourly nonexempt employees: one and a half times the hourly rate. Therefore, a receptionist with a 40-hour workweek would earn $25.95 for every hour worked over 40 in a workweek. Employers should check their state overtime laws, as some states have specific overtime requirements that are stricter than federal requirements.

For information on calculating overtime for the fluctuating workweek and Belo contract compensation agreements for nonexempt employees, see What is the difference between the fluctuating workweek compensation method and a Belo contract?


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