Q: Are companies required to pay overtime to employees classified as salaried nonexempt? If so, how is overtime calculated?
A: Yes. An employee can be classified as nonexempt and be paid on a salary basis, but he or she will remain subject to the Fair Labor Standards Act (FLSA) overtime requirements. Employers still must track hours worked for nonexempt employees paid a salary and must continue to pay overtime as required. 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, an office administrator who earns $38,000 per year earns the equivalent of $18.27 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, the employee would earn $27.41 for every hour worked over 40 in a workweek.
Please contact your HR Business Partner if you have any questions regarding classifying employees as exempt or nonexempt and/or paying overtime.