Q&A: The New Overtime Regulations
© 2005 Door & Access Systems
Publish Date: Spring 2005
Author: Naomi Angel
Q&A: The New Overtime Regulations
By Naomi R. Angel, DASMA Legal Counsel
On Aug. 23, 2004, the Department of Labor issued new regulations for overtime pay. If your company has not taken steps to comply with the new regulations, you must act immediately to do so.
The changes clarify who is entitled to overtime pay and who is not. Some of these changes are likely to apply to door and access systems dealers. Here are some questions that you may be asking.
My only employees are installers and office help, and they are all paid by the hour. Am I obligated to pay overtime to all these employees?
Yes. These hourly employees are considered “nonexempt employees,” that is, they are not exempt from being paid overtime. For example, if you have an installer who is paid by the hour, and that installer works more than 40 hours in a work week, you must pay that employee overtime.
What is the overtime rate that I am obligated to pay?
Overtime pay is time-and-a-half of the employee’s pay rate.
Can I occasionally change my “work week” to avoid paying overtime?
No. A “work week” can run from Monday through Sunday or any continuous 168-hour period. However, the designated work week must be followed consistently.
My office manager usually takes a 30-minute lunch break, but she eats lunch at her desk and answers the phone if it rings during that period. Is that time considered part of her 40-hour work week?
Yes. If she is still “on duty,” her time is “work time.” Other examples of “work time” include: rest periods, training periods, work site preparation and clean-up, most travel time (other than commuting to and from work), and meal periods if doing the employer's work.
I have a sales manager, an office manager, and a warehouse manager who are all paid a salary. Since they are paid by salary and not by the hour, are they automatically exempt from overtime pay?
Not necessarily. To be considered exempt, the employee must pass three eligibility tests:
(1) The employee must be paid on a salary basis which means a fixed amount paid on a regular basis without regard for the quality or quantity of work.
(2) The employee’s job duties must primarily involve executive, professional, or administrative duties as defined in the regulations.
(3) The employee’s salary level must exceed a minimum of $455 per week or $23,660 annually. Employees paid below this minimum must be paid for overtime, regardless of their job titles, duties, and responsibilities.
We sometimes give hourly employees an extra day or two off if they need to work a weekend at a home show or if we send them to the annual Garage Door Expo. In these situations, can we grant days off instead of paying overtime?
In these two situations, you can grant extra days off to these hourly (nonexempt) employees, but you cannot do that to avoid overtime pay. If a nonexempt employee works more than 40 hours in his/her normal work week, you must pay time-and-a-half for those overtime hours.
We have considered granting “bank time” or paid time off to compensate an employee for time worked out of the office, such as at home shows or conferences. Can we do that instead of paying overtime?
Generally, no. If “bank time” is used to offset overtime hours, then that bank time must be used in the same week in which the overtime was accrued, and it must be provided at the rate of time-and-a-half for each overtime hour. The practice of “banking time” derived from overtime hours for use at some future date is contrary to federal law.
Is it possible that my state has different overtime regulations than these new federal rules?
Yes, but the federal regulations establish the minimum requirements. States may impose more-stringent requirements. Currently, 18 states, including California and Illinois, have overtime rules that are different from the federal regulations.
You need to be aware of overtime laws in your state. As always, check with your attorney if you have any questions.
The new regulations include other special overtime rules that are outside the scope of this article. Some new rules apply to computer employees and outside salespeople. For more information, go to www.dol.gov.
This article is provided solely for informational purposes and does not constitute legal advice. If you have specific questions or concerns about a legal issue, consult your company’s legal counsel for guidance.