Can highly paid workers be exempt from overtime?

Can highly paid blue collar workers be exempt from overtime under the 541 exemption to the FLSA?

This post will help you determine if you are correctly paying blue collar workers under the FLSA, and will offer suggestions on using Canopy WS to manage FLSA.

In today’s tight labor market, it is not uncommon for skilled labor positions to be highly compensated. Hi tech manufacturing, large construction projects, oil & gas work, all may include several high-paid workers. We also find highly remunerated employees among our local government clients, and those who employ police or fire personnel.

On March 7, 2019, the Wage and Hour Division of the Department of Labor (DOL) issued a new overtime rule setting minimum salary thresholds for exemption from overtime pay requirements under the highly compensated employee exemption to $147,414. The rule goes into effect January 1, 2020. The question is, can you exempt these employees from the Fair Labor Standards Act (“FLSA”) overtime requirements.

Blue collar workers, however, are not covered by this exemption. As stated by the Department of Labor “.. non-management employees in production, maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers, are entitled to minimum wage and overtime premium pay under the FLSA, and are not exempt," under the highly compensated employee exception, “no matter how highly paid they might be.” For additional information see DOL Fact Sheet #17, below. (Click the image to open and download the document).

Product Tips

First, set up the right classifications for your jobs. To do this, use the Job Classifications module. In this module you can define whether or not a particular job is FLSA exempt. Advanced users can define the specific job duties at the Job Classification level, which would justify an exempt or nonexempt classification. This function is useful in the case of an audit.

Now, what about if you have a particular category of jobs in which you have both exempt and nonexempt workers? In this case, you’ll want to use Job Groups. In the set up tables, create your job groupings, and then, under each of those, create the separate job classifications.

Finally, create a report called Highly Compensated Employee Exemption. Here, you can list employees by exempt status and compensation. Set your compensation filter to be less than the mandated salary levels for exemption along with filters for Status = Active and FLSA = Exempt . When you run the report, you should see only salaried employees who are in another FLSA exemption.

As always, if you need help, reach out to a Canopy customer support representative!

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