Am I required to pay overtime?

UPDATED: Oct 1, 2022

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Am I required to pay overtime?

I am a small business owner with less than $500,000 a year in sales but I am under interstate commerce. We are an LLC partnership, husband and wife. We

hired my husband’s sister to work our business. She was our only employee and we had her listed as exempt. We paid $480 a week. What FSLA laws apply to us?

Asked on July 24, 2018 under Employment Labor Law, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

The Fair Labor Standards Act or FLSA applies to any business engaged in interstate commerce, as you indicate you are, regarless of sales/business volume; therefore, you are covered by the overtime rules. You must pay your husband's sister overtime when she works more than 40 hours/week unless all of the following are true:
1) She is paid a salary, not on an hourly basis (all hourly employees get overtime);
2) The salary is at least $455/week, or $23,660/year; and
3) Her duties and authority meets at least one of the tests or criteria for exemption which can be found on the U.S. Dept. of Labor website. Review those exemptions and compare to her job--unless one or more fits her (there is overlap between them, so more than one could apply), she must be paid overtime even if she earns an otherwise high-enough salary. The most likely exemption is the administrative employee exemption, but also check the executive or managerial, professional employee, and (if she does any "sales"), sales-related exemptions.
The fact you called her exempt is not dispositive; she must be the criteria above to be exempt. Of course, even if she is overtime eligible, you can avoid paying overtime by not having or allowing her to work more than 40 hours per week.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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