What is Salaried Overtime?

Salaried overtime is a term that defines a class of employees that receives a set amount of funds each pay cycle yet still qualify for extra compensation when they work above the standard 40-hour workweek. The way for a salaried employee to determine if he is eligible for additional compensation is simple in most cases; only those within a managerial capacity or certain other industries are excluded. To fall under one of these exclusions, the employee must receive a true salary as defined by state and federal laws, meaning that a set amount of pay must be provided as long as that person works during that particular pay cycle. Those eligible for salaried overtime are not guaranteed time-and-a-half pay like hourly workers either, as that amount is solely determined by the employer.

A better understanding of salaried overtime can be explained through a quick example. If a worker got paid a weekly salary of $400 US Dollars (USD) to perform cleaning services and that person did not supervise at least two other employees, then he would be eligible for salaried overtime. Now, if he had multiple workers that he instructed throughout the day, salaried overtime would not be a requirement by law. This decision would be solely up to the employer to pay the overtime or not, and it can be presented in the form of a bonus, incentives, or even gifts and still fall within federal guidelines. If the worker in the above example does not receive a full salary for weeks when he is out of work because of sickness or injury, however, then he would always be eligible for overtime because he is not considered a true salaried employee to begin with.

There are a few other exclusions used when determining if an employee is eligible for salaried overtime. Although a standard work week is normally defined by the employer beforehand, a true salaried employee is paid the same amount per pay cycle regardless of the actual hours worked. If an employee takes a full week off of work for vacation, then he is not eligible to receive a salary at all, and the pay can be pro-rated for partial work weeks if the absences are not medical-related. These examples would not violate the laws defining a salaried employee, so salaried overtime would not be automatically available. When employers disregard the definition of a salaried employee provided by state and federal agencies, then salaried overtime should be made available to each worker that qualifies.