Strange Exemptions to the Overtime Law

The new overtime regulations are causing employers to take a closer look at the executive, administrative and professional exemptions from overtime, but did you know that there are a number of strange exemptions that allow you to pay specific employees on a salary and not worry about overtime pay?

These obscure exemptions may have more to do with the strength of certain industry lobbyists back in the 1940’s when the Fair Labor Standards Act (“FLSA”) was passed than they do with any logical reason for exempting these employees. But they are still on the books and may allow a few employers to avoid the rush to reclassify salaried employees by December 1, 2016, when the new overtime rules take effect.

Employees of certain seasonal amusement parks or recreational venues, for example, don’t have to be paid overtime or minimum wage. To qualify, the amusement park generally can’t be in business any longer than seven months of the year, or if it is, be affected so that at least six months of the year, its receipts are cut to 2/3s of the receipts in the six good months. All of the amusement park’s employees are exempt, not just the ride operators and the food concessionaires, but also the accounting, human resources and management personnel, but only as long as they work in the park and not in a corporate office that runs several seasonal parks. How is that for an arcane exemption that won’t help 99% of employers, but could be very important if you own Wonderland Park or a miniature golf course?

Similarly, there are overtime (but not minimum wage) exemptions from the FLSA for these employees:

  • Sales people and repair mechanics at auto dealerships, farm implement dealers, and truck dealers, but not necessarily the people who work in the office at those dealerships.
  • Taxi drivers.
  • Sailors.
  • Railroad workers.
  • Airline workers.
  • Truck drivers, driver’s helpers and truck mechanics who are already regulated by the Department of Transportation.
  • Employees engaged in fishing operations.
  • Announcers, news editors and chief engineers at radio and television stations (but only in non-metropolitan areas).
  • Employees of small newspapers with circulation of less than 4000.
  • Certain commissioned salespeople in service or retail establishments, but only if more than half of the employee’s income is paid in commissions and the salesperson ends up with a regular hourly rate of pay of at least $10.88 per hour (meaning the employee has to clock in and out and never have a bad week without commissions).
  • Live-in domestic help (although the DOL has narrowed this exemption considerably).
  • Employees of motion picture theaters.
  • Agricultural workers, such as farm workers, ranch hands and feedlot workers, but not agricultural service company employees, such as crop dusters, irrigation installation workers or fertilizer company employees.

Granted these are esoteric exemptions that don’t apply to many job descriptions. Most employees will be affected by the change on December 1, 2016, requiring you as an employer to pay overtime wages to the vast majority of employee earning less than $47,476 per year. But if you believe that one of these exemptions apply to your employee, get an employment attorney’s opinion before counting on that exemption keeping you out of hot water with the Department of Labor.

Remember when you are considering these FLSA exemptions and deciding whether you as an employer have to pay overtime pay, certain states have their own overtime laws. For example, the California legislature just this week turned its back on 70 years of history by making farm workers non-exempt over the next five years, meaning that after a phase-in period, they will have to be paid for overtime for working more than 40 hours per week by 2022.

If you are employer in Texas, however, your state has simplified the matter by following the federal FLSA rules and not adopting special Texas regulations. Texas employers, therefore, just have to know and understand the FLSA exemptions and how to calculate and pay overtime per the FLSA regulations. And that is a big enough challenge for any employer.

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