What Are “Highly Compensated” Employees And Are They Entitled To Overtime Pay?


Posted by: Brookside Admin

When you hear the term “highly compensated”, what comes to mind? A six-figure salary? Lots of perks? No matter what you think of first, how do you determine what a “highly compensated” employee is and what is the cut off for those considered to be in this bracket? The Fair Labor Standards Act exempts employees that are classified as “highly compensated” from any overtime requirements. However, you have to determine which employees are classified as such to determine if that employee is entitled to overtime. In November 2014, the First Circuit Court answered the questions that swirl around classifying “high compensated” employees and if they are entitled to overtime in Litz v. The Saint Consulting Group.

The case, which involved plaintiffs Crystal Litz and Amanda Payne, was against The Saint Consulting Group, which provides political consulting around the US for land development projects. Litz and Payne were both project managers for the company and earned over $100,000 per year. The plaintiffs stated that based on their paychecks and client billings, they worked more than 40 hours per week yet received no overtime pay. The company instead guaranteed them at least $1,000 per week, even if they did not have any billable hours. If the employees had an amount over the $1,000, the company would multiply the hours they worked by the employee’s hourly rate.

The Fair Labor Standards Act does not apply requirements for overtime to “any employee employed in a bona fide executive, administrative, or professional capacity.” Department of Labor regulations also add on the stipulation that professional or administrative employees “who receive at least $100,000 in total annual compensation” and are compensated “at least $455 per week” in fees or salary. According to the FLSA, this case does not fit the requirements for them to be allowed overtime. This is exactly how the First Circuit ruled, too.

However, the employees claim that the $1,000 per week minimum was classified as a “stipend” and not as their salary. Since the money was then paid at this pre-determined amount as part of their compensation and this could not be reduced, the First Circuit court found that it was their salary and not a stipend, which nullified their claim for recovery of overtime.

While this case was not one where the plaintiff received compensation, there are wage and hour cases throughout the US that help employees recover unpaid overtime. Wage and hour cases are on the rise throughout the US as more people have access to information about overtime, the federal laws that govern it and it’s payment for employees, and more. If an employer is not paying for the overtime that an employee is working, they can be held liable in federal court.

If you have questions or concerns that you may not be getting compensated for all of the overtime that you are working, please contact our offices today for a free consultation with an experienced employment attorney. (918) 582 – 2500

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