1400 Gables Ct #103 Plano, TX 75075
5601 Bridge Street, #300, Ft. Worth, TX 76112

Plano Business Lawyer: More Insights about How to Classify the People Who Power Your Business

Plano business lawyer, Richard “Ric” Armstrong, talks about how to categorize employees in your Texas business.

Classifying workers correctly as either “employees” or “independent contractors” comprises only part of your responsibility as a Texas business owner. You must also correctly determine whether your employees are “exempt” or “non-exempt” from mandatory overtime pay—a rule that is currently in flux by the courts. Let’s explore this idea a bit further.

Exempt or Non-exempt

The Fair Labor Standards Act (FLSA) requires employers to pay overtime to most hourly employees for any hours worked in addition to the standard 40-hour work week. However, many broad exceptions exist, particularly for those who are considered executive, administrative or professional employees. These workers may be exempt from mandatory overtime pay as long as they receive a minimum salary (currently $455/week, or $23,660/year) instead of an hourly wage, and provided they receive that salary every week they work.

  • Example 1: Judy earns minimum wage as a receptionist paid hourly. She must receive overtime pay once her time card exceeds 40 hours.
  • Example 2: John is a salaried HR manager in a large corporate firm. He is exempt from required overtime pay.
  • Example 3: Tina is a retail store manager making a weekly salary of $400. The law entitles her to overtime pay because her salary is below the exemption threshold.

Caution: Some states, most notably California, have stricter standards than the FLSA on overtime, meal and rest breaks. Consult your labor attorney on these standards if you reside in such a state.

Thresholds in Flux

In 2016, the Department of Labor attempted to double the minimum threshold for mandatory overtime from $23,660/year to $47,476/year. However, in December 2016, a week before the rule took effect, a federal judge here in Texas blocked it by a temporary injunction, as NPR reports. With a new administration in power carrying very different opinions than the previous one, the future of this new rule remains uncertain. For now, the thresholds remain as they have previously been.

Failure to pay legally mandated overtime can result in lawsuits and stiff penalties. If you need legal advice from a Dallas business lawyer regarding this issue, call Armstrong The Law Firm, P.C., today at 972-424-L-A-W-S (5297).




Richard L. Armstrong, Principal


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Armstrong The Law Firm, P.C.
Plano Location
1400 Gables Ct #103
Plano, TX 75075

Fort Worth Location (By Appointment Only)
5601 Bridge Street, Ste. 300
Ft. Worth, Texas 76112

Phone: (972) 424-5297