In this series, we will explore some of the ways states vary from one another in their employment laws.
To be exempt from overtime under state and federal law, an employee has to: 1) be paid a fixed salary rather than an hourly wage (the “Salary Basis Test”), 2) be paid at or above a specified salary threshold (the “Salary Level Test”), and 3) primarily perform duties that fall into the executive, administrative, or professional categories or a few other exempt categorizations (the “Duties Test”).
Under the federal Fair Labor Standards Act (FLSA), an employee can satisfy the Salary Basis Test and Salary Level Test if they earn at least $684 per week, meaning an employee who earns at least $35,568 per year and meets the Duties Test can be exempt from overtime payment. Since most states’ overtime laws mirror the FLSA, it would be easy for employers to assume that their employees were exempt from overtime if they earned this much annually. But this assumption would be incorrect in six states.
Alaska, California, Colorado, Maine, New York, and Washington have set their Salary Level Tests at a higher rate than the federal government:
- Alaska: $952.80 per week ($49,545.60 per year)
- California: $1,320.00 per week ($68,640 per year)
- Colorado: $1,006.25 per week ($52,325 per year)
- Maine: $845.21 per week ($43,950.92 per year)
- New York (New York City and surrounding counties): $1,237.50 per week ($64,350 per year)
- New York (outside the New York City metro area): $1,161.65 per week ($60,405.80 per year)
- Washington: $1,499.40 per week ($77,968.80 per year)
As such, an employee who earns $35,568 per year in these states would fall significantly short of qualifying for the state overtime exemption and that employee would be eligible for overtime pay for work beyond 40 hours in a week and for all other hours qualifying them for overtime under state law.
This is significant because failure to pay overtime can result in significant penalties and costly litigation. Unfortunately for employers, misunderstanding state overtime laws is not a valid defense. Employers with employees in these six states should review their exempt employees’ salaries and ensure that they earn enough to meet the state Salary Level Test.
