Employers often have misconceptions about overtime exemptions under the Fair Labor Standards Act (FLSA). Legal experts recommend that employers understand and steer clear of these misunderstandings to ensure wage and hour compliance.

Brian B. Kelly, an attorney with Greenberg Traurig in San Francisco, highlighted these common myths:

• Misconception One: “If the job title sounds senior enough, the employee is safely overtime exempt.” In reality, job titles are not directly relevant to an exempt classification analysis; job duties are, as well as salary basis and salary threshold.
• Misconception Two: “I’m pretty confident that this employee almost never works more than 40 hours per workweek, so I don’t want to deal with the hassle of having them track time and paying them hourly.” In fact, even small amounts of overtime can create expensive unpaid wage liability, which can likely be alleged on not only an individual basis, but potentially also a collective, class, or representative basis as well.
• Misconception Three: “The employee agreed to be paid a salary and be treated as overtime exempt.” In general, overtime exempt status cannot be arranged by contract and being paid by salary alone does not result in exempt status.

Salary-Basis Test

Another common misconception is that if an employer properly classifies an employee as exempt from overtime, the employer can pay the employee using any method other than a salary basis — such as hourly deductions for periods in which no...

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