Overtime-Exempt Employee Wins Overtime Pay

Last week, the US Supreme Court held that a highly compensated employee who was classified as an overtime exempt employee was in fact entitled to overtime pay.

The employee earned over $200,000 annually and appeared to meet the requirements for his specific overtime exempt classification. The court, however, very narrowly construed the federal regulations in favor of the employee. The court held that the payment method did not comply with the federal regulation’s definition of a salary because the employer calculated his pay on a daily basis.

This is a reminder that courts often narrowly construe overtime exempt regulations resulting in overtime awards for employees. Seemingly small deviations from the regulations can result in employer liability. And when it comes to federal regulations, employees often recover up to 3 years of overtime.

This holding would not be precedent in state court. However, many state courts find these types of federal holdings very persuasive because many states model their state overtime regulations after the federal version, i.e., California, Oregon, Washington, and New York among others.

We are here to help employers successfully navigate the ever-changing world of human resources law. If you have questions about compensation structure within your own organization, please don’t hesitate to reach out.

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