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September 11, 2023
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In Wilson v. Schlumberger Tech. Corp., the Eleventh Circuit Court of Appeals clarified how the Fair Labor Standards Act (FLSA) overtime exemption applies. The FLSA regulations provide two options for an employer to prove that an employee is exempt from receiving overtime pay: (1) the employee receives the minimum weekly salary basis and may receive additional compensation paid on any basis; and (2) the employee’s earnings may be computed on an hourly, daily, or shift basis if they are guaranteed at least the minimum weekly required amount paid on a salary basis regardless of the number of hours, days or shifts worked, and a reasonable relationship exists between the guaranteed amount and the amount actually earned.
Here, an employee received a guaranteed base meeting the minimum exempt salary threshold regardless of the number of hours, days, or shifts worked, in addition to other hourly rates and bonuses depending on the situation. However, his hourly and bonus pay significantly exceeded the salary pay. The question became whether the first or second exemption test applied.
Ultimately, the court said that the first test applies when an employee receives a base salary and additional compensation, and the second test applies when an employee is merely guaranteed a minimum salary but is typically paid on an hourly, daily, or shift basis. Because the employee here received a fixed base salary and additional compensation in the form of hourly rates and other bonuses, the first test applied.
- Have overtime exemptions reviewed for compliance.
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