The last viral video I saw about wages, was Lily Tomlin and Jane Fonda touting their own ignorance about how waitstaff are paid. Two days ago, another comedian, Trae Crowder, posted a video claiming that very few people receive overtime pay in the US because evil companies can simply change your title.

Crowder, obviously, doesn't have the same name recognition as Tomlin and Fonda, but he has been able to get almost 15,000 shares of his video in 36 hours. So, I thought I better set the record straight before it lands on your feed.

Crowder says,

"Now the way US overtime laws are written, all your boss has to do is check off a few simple boxes and now you're exempt from getting paid fairly. For example, do you make more than $23,660 a year? If so the Federal government says you don't need overtime."

Now, it's true that if you earn more than $23,660 a year, it's possible that you could be exempt from overtime, but that's just one tiny part of the laws. It's a necessary but not sufficient condition. In addition to the minimum salary requirement (which is considerably higher in some jurisdictions), he does go on to mention the "duties test."

They can just slap a plastic manager badge onto that spiffy vest they make you wear, and bam! You don't get overtime anymore. Even if your duties are exactly the same as they were before your shiny new title.

This is also false. So what are the rules? Let's break it down.

What Law Governs Overtime?

It's called the Fair Labor Standards Act or FLSA for short, and it sets out detailed requirements for when you are can be considered exempt from overtime. This law was originally passed when the economy was very different than today's knowledge-based economy and really should be updated to reflect that. It can be difficult for employers to correctly classify people, but employers are still subject to that law.

The Duties Test

Contrary to Crowder's assertion, the duties test has nothing to do with job titles. It has to do with your actual function. Even if your job title is "manager" and you earn more than $23,660 a year if you're spending the majority of your time helping customers or running a cash register, you are still paid by the hour and are owed overtime pay.

Manager: Managers have to supervise two or more people and the managing aspect has to be a big part of their job. They need hire/fire authority, and different responsibilities than just doing the work. A manager who makes the weekly schedule but then works the rest of her time like everyone else is non-exempt.

Professional:  If you're a doctor, lawyer, or CPA you are exempt. If you earn more than $100,000 a year, there's a very high probability that you're exempt. Other jobs depend on how much professional discretion you have and how independently you work. An analyst can be exempt if she works independently and has some discretion. An accounts payable clerk cannot be exempt.

Administrative Professionals: Some people think of this as "administrative assistants" but it's not. Almost all administrative assistants are non-exempt. This category covers people like finance, HR, QA, and IT (although IT has its own exceptions). Administrative professionals keep the business going.

Outside Sales.  If you go out and see customers to make sales, you're exempt. If you sit in an office and make phone calls, you aren't.

Everyone else is eligible for overtime pay. Sales clerks, brick layers, janitors, licensed practical nurses, school aides, and tons of other jobs do not qualify for exemption and are eligible for overtime pay. They must record all time and be paid for all time. If a non-exempt employee works unauthorized overtime, you still have to pay the overtime. You can punish her by firing her, but not by not paying her.

How is Overtime Calculated?

Generally, if you're paid an hourly wage of $20 an hour, for every hour over 40 (or over 8 in a day in some place, like California), then you'll receive $30 an hour. If you work 50 hours in a week you'll get $20x40 hours ($800) plus $30x10 (300), for a total of $1100 hours per week.

That's not the only way to calculate overtime. A company can classify you as salaried non-exempt. In that case, you earn a base salary, say $800 a week. If you work 25 hours one week and 40 the next, you get that same pay. If you work more than 40 hours in a week, the company can use a "flexible schedule" rule. So, for that same 50 hour work week,the calculation is a bit different. In this case, you'd take the salaried amount ($800) and divide it by the total hours worked (50) and calculate a new hourly rate ($16). Then you get 10 hours of overtime based on the $16 rate. You get $8 extra per hour for the 10 hours, so an addition of $80, or $880.

Why wouldn't all companies do this, as it clearly benefits the employer? Well, it only clearly does if the person regularly works overtime. If they work less than 40 hours, they still get the whole paycheck. Additionally, employers have to attract people to the job, and overtime pay is a good way to do that.

If You're Unfairly Paid

If you receive a salary and no overtime pay and you think that's not right, you ask your Human Resources Department to re-evaluate your position. If they come back and say it is exempt and you don't believe they are correct, you can file a complaint with your local Department of Labor or you can hire an attorney. What you shouldn't do is look to a comedian for the answers.