Time and Attendance

Exempt Employees & Overtime Pay In USA, Canada, Australia & Africa7 min read

By March 22, 2020 April 1st, 2020 No Comments

The difference between exempt employees and non-exempt employees, is who gets paid overtime and who doesn’t.

Exempt employees do not get paid overtime because they do not get paid the minimum wage.

Those who are exempt from overtime pay usually have it stipulated in writing in a contractual agreement between the company they work for and themselves.

In general, because there are different laws for the USA, Canada, Australia and Africa, it is usually the more senior staff who are exempt from overtime pay, such as:

  • Administrative staff
  • Executives
  • Professionals

Exemptions are based on the role the person fulfills, and this is worked out in weekly payment. 

Quick look at who’s exempt from overtime pay by country

  • An exempt employee in the USA is paid more than $6841 a week.
  • Canada senior staff who earn a regular annual income of at least two times the Manitoba average industrial wage are exempt from overtime2
  • Australians are exempt from overtime when they are in a senior position and when  they earn a minimum of $455 a week or $23,660 a year.

In Africa, individuals must earn less than R205 433.30 per year3 to be considered exempt from overtime pay.

Take note that employees who don’t work a certain number of hours may also be considered exempt as well as those who control their own hours, like sales people.

It is only employees who are considered full-time staff that companies need to pay overtime where necessary. Contractors are also excluded from overtime pay.

1https://www.thebalancesmb.com/exempt-vs-non-exempt-employees-overtime-rules-397359
2https://www.gov.mb.ca/labour/standards/doc,overtime-hours-control,factsheet.html
3https://businesstech.co.za/news/business/331409/what-employees-need-to-know-about-overtime-pay-in-south-africa/

Labour laws

Overtime rules for exempt and non-exempt employees by country

USA

The Fair Labor Standards Act (FLSA) governs labour law in the USA.

In 2020, new rules were instituted; in the USA, employees who make less than $684 a week, or $35,568 a year, are required by law to receive overtime pay, even if they were previously considered exempt employees. 

Overtime laws state that employees who are paid less than $107,432 a year must also be paid overtime.

Under the new rules those who are exempt, meet the following criteria:

  • They are paid a salary PLUS
  • They are in a “white collar” position, PLUS
  • They are paid more than the minimum weekly salary. 

The DOL lists specific types of employees who are classified as exempt from both minimum wage and overtime requirements as well as other types of employees who are exempt from overtime requirements only.

Note! An employee with an employment agreement that states that they are considered an independent contractor does not make it necessarily so in the eyes of the law. Instead, it is the role that ultimately determines whether the person is entitled to overtime pay.

Get in-depth information from the United States Department of Labor.

regulations-overtime

Canada

Canada’s labour laws are governed by the Fair Labor Standards Act (FLSA).

All people, no matter whether they are on a salary or hourly pay, may be owed compensation for extra hours worked, unless exempted by law.

According to Canadian law, exempt employees are most often senior staff, who fall into these categories of roles: 

  • Executive
  • Administrative
  • Professional
  • Outside sales
  • Computer professional

It’s important to note that state and local law usually exempts the same categories of employees but may also:

  • Stipulate different requirements for overtime payment exemption.
  • Add different categories for exempt employees.
  • Prohibit exemption of a particular group of employees.

Labour law can get confusing in Canada, and many technically exempt employees have won cases where the employer needed to pay them overtime. The best way that employers can protect themselves, is by making sure the details in the contractual agreement are well defined.

Get detailed information from the Government of Canada.

excel-timesheet-template-free-download

Australia

Australian workplaces are governed by the Fair Work Act.

People who get a salary are exempt from the Federal Fair Labor Standards Act’s Minimum Wage and Overtime provisions. 

Employees who are not entitled to overtime pay usually work a definite number of hours per day and receive a regular salary every month.

It’s important for employers to understand that the legal definition of “exempt employees” is about the employee’s level of responsibility more than anything else.

Note! When a staff member is considered exempt from the Federal Fair Labor Standards Act’s Minimum Wage and Overtime provisions, this does not necessarily mean that they cannot receive compensation for overtime.

Confusing, we know. 

Employers need to protect themselves by providing detailed terms in agreements between themselves and employees.

Get detailed information from the Fairwork Ombudsman.

labor contracts

Africa

The Basic Conditions of Employment Act (BCEA) is what governs labour law in Africa. 

Exempt employees:

  • Need to earn less than R205 433.30 per year, or
  • Need to be in a senior managerial role, or
  • Must be sales staff who regulate their own hours and travel to customer’s premises, or
  • Are those who work less than 24 hours a month.

However, an employee who earns more than the threshold may be excluded from statutory overtime, but if their employment contract stipulates that they’re entitled to overtime, then they may have a claim for it.

For detailed information, consult the Basic Conditions of Employment Act.

excel-timesheet-template-free-download
Albert Brits

Albert Brits

Albert co-founded EasyRoster Software in 1995 and helped grow the business to where it is today. Albert has over 25 years of experience in Workforce Management and Software development which has helped the EasyRoster team build one of the best WFM systems on the market today.