8th Circuit explains when salaried employee isn't exempt from overtime pay

When, and under what circumstances, is a salaried employee considered not "salaried" and therefore not exempt from receiving overtime pay under the Fair Labor Standards Act (FLSA)? The U.S. 8th Circuit Court of Appeals (which covers Arkansas and Missouri employers) recently rendered a decision that reviews the question in depth and serves as a primer for interpreting the FLSA's salaried employee exemption.

Facts

Little Rock's Falcon Jet plant paid employees on a biweekly basis. Though team leaders and production liaisons were classified as exempt salaried employees, the employer required them to clock in and out of work and to track the projects on which they worked on an hourly basis. As a result, the company could accurately determine project costs for accounting purposes and pay the workers straight-time overtime compensation for hours they were "directed" to work over 40 in a one-week period.

For "regular" hours worked, Falcon Jet calculated the hourly rate by dividing each employee's annual salary by 2,080 (or 40 hours per week multiplied by 52 weeks in a year). When a team leader or production liaison recorded fewer than 40 hours in a workweek, the employer deducted available time from one of her paid leave banks, usually vacation or sick time. It also deducted at the regular hourly rate for each hour she didn't work using unpaid Family and Medical Leave Act (FMLA) leave time.