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 Steve Cesare
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In an attempt to simplify their payroll process, many landscapers have made several positions (e.g., foremen, estimators, office managers) “salaried” rather than “hourly.”
While I ardently disagree with those decisions, the fundamental problem is that some landscapers mistakenly believe that “salaried” employees do not have to be paid overtime wages. That is not the case.
“Exempt” employees do not have to be paid overtime; “salaried” workers are not always “exempt.” Accordingly, “non-exempt salaried” employees must be paid overtime when they work more than 40 hours per week.
 Under the Fair Labor Standards Act (FLSA), a non-exempt salaried employee can sue an employer for miscalculated overtime. To prevent this problem from occurring, this article provides basic overtime calculations that foster FLSA compliance.
40 Hour Workweek. This example involves a non-exempt salaried employee who receives $400 for a standard 40 hour workweek.
The employee’s regular rate of pay is $10/hour ($400 divided by 40). The employee’s overtime rate is $15/hour ($10/hour multiplied by 1.5).
If this employee works 55 hours in a workweek, the employee must receive the following:
- the stated salary ($400),
- plus $225 ($15/hour multiplied by 15 overtime hours),
- for a total weekly wage of $625.
50 Hour Workweek. This example involves a non-exempt salaried employee who receives $400 for a 50 hour workweek. The employee’s regular rate of pay is $8/hour ($400 divided by 50). The employee’s overtime rate is $12/hour ($8/hour multiplied by 1.5). If this employee works 55 hours in a workweek, the employee must receive:
- the stated salary ($400),
- plus $40 representing the difference ($4/hour) between the regular rate of pay he already received as part of his salary ($8/hour) and the overtime rate ($12/hour), multiplied by all hours (10) worked between 40 and the 50 hour salaried workweek ($12/hour minus $8/hour) multiplied by (50 hours minus 40 hours)),
- plus $60 in overtime wages for all hours worked beyond the 50-hour workweek (5) for which he did not receive salaried pay ($12/hour multiplied by (55 hours worked minus 50 hour workweek)),
- for a total weekly wage of $500.
37.5 Hour Workweek. Due to cost cutting efforts over the past several years, many landscapers have reduced their employees’ workday from 8 hours to 7.5 hours, resulting in a 37.5 hour workweek. In this example, a non-exempt salaried employee who receives $400 for a 37.5 workweek has a regular rate of pay equal to $10.67/hour ($400 divided by 37.5). The employee’s overtime rate is $16/hour ($10.67/hour multiplied by 1.5). If this employee works 55 hours in a workweek, the employee must receive:
- the stated salary ($400),
- plus $26.68 for all hours worked (2.5) between 37.5 and 40 multiplied by the regular rate of pay (2.5 times $10.67),
- plus $240 for all overtime hours ($16/hour multiplied by 15 overtime hours),
- for a total weekly wage of $666.68.
40 Hour Workweek Plus Non-discretionary Bonus. The FLSA requires all non-discretionary bonuses (e.g., job quality, attendance, safety) be included in overtime calculations. In this example, a non-exempt salaried employee who receives $400 for a 40 workweek ($10/hour) also earned a $200 production bonus during a week in which he worked 55 hours. In this example, the regular rate of pay is $13.64 (55 hours multiplied by $10/hour) plus $200 bonus) divided by 55 hours). The overtime premium is $6.82 (regular rate of pay ($13.64) multiplied by .5). This employee must receive:
- $750 in straight time pay (55 hours multiplied by $10/hour) plus $200 bonus),
- plus $102.30 (15 overtime hours multiplied by the overtime premium of $6.82),
- for a total weekly wage of $852.30.
Summary. These examples illustrate overtime incidents. They do not include shift differential pay, fluctuating workweek or double-time pay scenarios, which are more complex. To remain legally compliant, you should periodically audit their overtime procedures, and ensure all calculations are made within the context of the FLSA and relevant wage and hour laws.
Steve Cesare is an industrial psychologist with the Harvest Group, a landscape consulting group. Send your HR questions to cesare@gie.net.
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