It is a common misunderstanding that salaried employees just do not have to be paid overtime.
While a Pennsylvania employer’s decision to pay a flat salary is one requirement, an employer has to be sure to satisfy all legal conditions before declaring an employee exempt from minimum wage and overtime requirements.
For example, under federal law, employers who otherwise would have to pay federal minimum wage and overtime may exempt administrative, executive and professional employees.
Currently, employers must pay these employees at least the equivalent of $684 per week, or, for a year-round employee, just over $35,500 annual salary.
In other words, if an employee is not making the minimum salary, and the employer has to meet federal standards, the employer has to raise the employee’s salary, ensure the employee works only the equivalent of 40 hours a week or pay overtime at 150% of the employee’s wage.
Employers should review their salaried workers’ job descriptions carefully
It is also important for small to mid-sized businesses in Central Pennsylvania to remember that job titles alone do not make an employee exempt from overtime.
Executive and administrative employees, for example, must be able to make decisions at work with no judgment.
An employer should review its job descriptions carefully to be sure that an employee’s duties indeed are what is expected of an executive, administrative or professional employee.
Otherwise, no matter what the employee’s title is, there could be a claim that a salaried employee did not receive overtime pay to which they were entitled. These and other misclassification claims can damage a company’s reputation and sidetrack its financial goals.
There are many good reasons why a business in the greater Harrisburg area might want to pay employees a flat salary. However, they should be certain that all of the legal details are in order before doing so.