Ernst & Young Overtime Cases Website

Just Because You Have a College Degree and They Paid You a Salary and Called You a "Professional" Does Not Mean They Can Deny You Overtime Pay

WHY ERNST & YOUNG STAFF AND SENIORS WOULD BE OWED OVERTIME PAY IN ADDITION TO THEIR SALARY AND BONUS PAY

WHY WOULD YOU BE OWED OVERTIME IF YOU WERE NEVER PAID BY THE
HOUR AND PAID A SALARY AND HAD A COLLEGE OR GRADUATE DEGREE AND AGREED TO JUST RECEIVE A SALARY? 

BECAUSE THE LAW ONLY EXEMPTS EMPLOYERS FROM PAYING OVERTIME TO SALARIED "PROFESSIONALS" WITH THE PROPER PROFESSIONAL EDUCATION AND/OR LICENSE AND WHO ALSO SPEND MOST OF THEIR TIME PERFORMING "PROFESSIONAL" LEVEL WORK INVOLVING THE USE OF INDEPENDENT JUDGMENT AND DISCRETION.  THE COURTS WILL NOT ENFORCE AN AGREEMENT TO GIVE UP OVERTIME PAY IN EXCHANGE FOR A FLAT SALARY UNLESS THE OTHER OVERTIME EXEMPTION REQUIREMENTS OF THE LAW ARE MET.

There is a great deal of misunderstanding regarding when employees are entitled to overtime pay. As a general rule, most employees are presumed to be entitled to overtime wages unless their employer is able to establish that the employee is exempt from the payment of mandatory overtime wages. Paying an employee a salary does not, by itself, exempt an employer from paying overtime wages to the employee.  Nor can an employee "agree" to give up or "settle" their right to overtime pay (either orally or by signing a job offer letter or by signing a termination or severance agreement) except through a settlement overseen by a Court.   Employees are not allowed to voluntarily "waive" their right to overtime because if such waivers were allowed employers would be able to avoid their responsibility to pay overtime wages (employers would simply require their workers to "waive" any right to overtime pay).

To be an overtime exempt salaried professional employee a worker must have both:

1) Undergone an extended and advanced course of professional study, typically meaning that they have secured both a specialized undergraduate and graduate degree and/or been licensed as a professional (for example as a CPA or an attorney).  A worker possessing only a general academic education cannot be treated as an overtime exempt professional.
  
AND

2) Be employed predominately performing work of a "professional" nature. This means actually performing work requiring independent judgment and discretion and of an intellectual nature. For example, simply gathering audit data in compliance with specific, and largely inflexible, instructions requiring no significant independent decision making and entering it into a spreadsheet would not constitute audit work of a "professional" nature. Making the decisions about the kind or scope of information to gather in connection with an audit, and how that information should be interpreted or applied, might well constitute work of a "professional" nature.

The bottom line: Just because an employee has a college or graduate degree and is called a "professional" and is paid a salary does not make him overtime exempt. Even an employee having a license as a CPA or attorney may be entitled to overtime wages if he is not performing work of a "professional" nature.   A fully licensed  attorney or CPA who is paid a large salary, but spends most of their time doing clerical work, is not overtime exempt.

Because salaried employees do not receive any pre-determined "hourly rate" overtime pay for such employees is calculated based upon a Court determining what their effective "hourly rate" was and then awarding the employee overtime (time and one-half pay or in some situations double time pay) based upon that effective "hourly rate." Under State Law in California, that "hourly rate" would be determined by dividing an EY staff or senior's weekly salary by 40, often resulting in an hourly rate of about $25 an hour or more.   The overtime rate for such staff or senior would be one and one-half times that rate ($37.50 an hour or more).   With many staff or seniors working long hours (50 hours a week or more)  they could be owed substantial amounts of unpaid overtime wages.

An employer is not excused from paying overtime because it has paid a "bonus" to an employee, or paid an employee a higher salary to somehow "compensate" the employee for their longer hours of work.  California's overtime laws are very strict.  An employee who is not exempt (either as a professional or for another reason) from the payment of overtime must receive overtime IN ADDITION to whatever salary or bonus they were paid.  Often employers ignore these strict requirements by paying a flat salary when they could have, in hindsight, just paid the employee an hourly wage plus overtime that would have been approximately equal to that salary.  Employers are liable for unpaid overtime wages as a result of engaging in this sort of "wage structure failure" (paying a flat salary instead of an equivalent hourly wage plus overtime) since the Court does not allow an employer to "go back" and in hindsight pay an equivalent hourly wage plus overtime.

An employer is also not excused from paying overtime because no exact records exist of the time an employee worked.  The employer is required by law to keep accurate employee time records.  If exact time records were not kept (often employers do not have salaried employees "punch the clock") the court can award the employee overtime wages based upon the employee's approximation of the typical hours he worked.


Leon Greenberg
Attorney at Law
2965 S. Jones Boulevard #E-3
Las Vegas, Nevada 89146
(702) 383-6369
Member California, Nevada, New York,
New Jersey and Pennsylvania Bars

Email: attorney at overtimelaw.com

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Advisement: The views and opinions expressed herein are strictly those of the above listed attorneys.  Those expressions are consistent with, and based upon, established law and precedents.