Also known simply as an exempt employee, an overtime exempt employee is one that is not covered by any type of governmental provisions that relate to the payment of overtime pay to workers. While employment laws in different countries vary in how to classify an employee with this status, most do provide at least some guidelines for determining if a given job position qualifies for exemption from overtime pay. Most of these regulations and guidelines have to do with the type of work performed and the frequency of pay.
In order to be considered an overtime exempt employee, labor laws in most nations require that the employee in question must receive some type of salary rather than being paid an hourly rate. Some nations also require that the salaried individual be paid weekly or biweekly, although there may be provisions for paying the salaried employee on a monthly basis. It is not unusual for regulations to also establish a minimum salary that must be earned before the employee can be considered overtime exempt.
Along with the classification as a salaried employee who receives at least the minimum pay required by law to be considered overtime exempt, there are usually additional criteria that must be met. One common example has to do with individuals who function in a supervisory or management role. Regulations in a number of nations require that the manager oversee the function of at least two employees in order to be exempt from receiving overtime pay. A second option is that an individual who performs work that requires specific knowledge and skill sets, such as a teacher or an artist, may receive a straight salary that does not include any provisions for overtime pay.
Outside salespeople are often overtime exempt. Instead, they receive a salary plus some type of commission for their efforts. While an employer may require they work the number of hours that is considered standard according to relevant labor laws, any additional hours put in by the salesperson are not subject to additional compensation in the form of overtime pay. This means that the salaried salesperson does not receive additional overtime compensation when traveling to and from customer locations or choosing to research leads after those standard working hours.
It is important to note that what is considered overtime exempt in one nation may not be allowed in other countries. For this reason, it is essential for companies to remain up to date on current labor laws that apply in areas where they operate business facilities and comply with those regulations consistently. Failure to do so can lead to an investigation that requires the employer to issue back pay to employees who do not fit the criteria for overtime exempt status, and may also be subject to fines and penalties for the failure to accurately classify the employees.