Am I required to pay overtime?
UPDATED: Oct 1, 2022
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Am I required to pay overtime?
I am a small business owner with less than $500,000 a year in sales but I am under interstate commerce. We are an LLC partnership, husband and wife. We
hired my husband’s sister to work our business. She was our only employee and we had her listed as exempt. We paid $480 a week. What FSLA laws apply to us?
Asked on July 24, 2018 under Employment Labor Law, Texas
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 4 years ago | Contributor
The Fair Labor Standards Act or FLSA applies to any business engaged in interstate commerce, as you indicate you are, regarless of sales/business volume; therefore, you are covered by the overtime rules. You must pay your husband's sister overtime when she works more than 40 hours/week unless all of the following are true:
1) She is paid a salary, not on an hourly basis (all hourly employees get overtime);
2) The salary is at least $455/week, or $23,660/year; and
3) Her duties and authority meets at least one of the tests or criteria for exemption which can be found on the U.S. Dept. of Labor website. Review those exemptions and compare to her job--unless one or more fits her (there is overlap between them, so more than one could apply), she must be paid overtime even if she earns an otherwise high-enough salary. The most likely exemption is the administrative employee exemption, but also check the executive or managerial, professional employee, and (if she does any "sales"), sales-related exemptions.
The fact you called her exempt is not dispositive; she must be the criteria above to be exempt. Of course, even if she is overtime eligible, you can avoid paying overtime by not having or allowing her to work more than 40 hours per week.
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