Question:
Jennifer,
My office manager is paid $105k. She is 1 of 2 employees I have at my practice. Do I have to pay her overtime? I consider her a salary employee.
Thank you in advance.
Dr. R
Answer:
It depends. Even though this might sound like a straightforward question, being paid a salary does not, by itself, make an employee exempt from overtime. Under the Fair Labor Standards Act, employees are entitled to overtime for hours worked over 40 in a week unless they meet a specific exemption. See here.
The two most applicable exemptions to your situation are the Executive Exemption and the Administrative Exemption. Under both, the employee must be compensated on a salary basis at a rate of $684. With $105k a year.
The second requirement focuses on the employee’s individual duties. To qualify as an exempt executive employee, the employee must generally:
Manage the practice or a recognized department of it,
Regularly direct the work of at least two full-time employees, and
Have authority to hire, fire, or change employee status.
In a small practice like yours, where the employee is one of two employees, the executive exemption likely would not be satisfied where the employee is only supervising one other employee (or none).
To qualify under the administrative employee exemption, the employee's primary duty must involve office or non-manual work directly related to the management or general business operations of the practice, and she must regularly exercise independent judgment and discretion on significant matters.
Importantly, job title (i.e “office manager”) and salary alone do not determine exempt status. The focus is on what the employee actually does, not what you call them, and the determination is not always cut and dry. Happy to get more fact specific. At the end of the day, if the employee lands in the "gray area", we will always have to counsel to keep hourly and pay overtime, as the facts and temperature lean towards overtime being required..
