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Do Start Ups Need To Pay Their Employees Overtime Compensation?

The combination of the sluggish economy and advances in technology has led to an increase in the number of “start-ups” – new entrepreneurial ventures that are often started with little capital. Start-ups face certain unique employment law issues. Even though they may start out too small to be regulated by all state or federal labor laws, as they grow these laws may affect them. Further certain laws still apply – regardless of the start-up’s size.

This means before you take a position at a start-up – or even start as an “unpaid intern” – you should be aware of your employment law rights. Many times, start-ups don’t have the resources for a general counsel or professional HR staff so they may be more likely to make errors and violate federal and state labor laws than established companies.

If you have questions about your employment rights or are looking to accept a position at a start-up, it’s a good idea to consult with an experienced Georgia wage and hour attorney right away.

One of the top considerations to keep in mind is how will you be classified – exempt v. non-exempt? The Federal Labor Standards Act (FLSA) provides that all non-exempt workers must be paid overtime compensation at a rate of one and one-half your regular rate of pay for hours worked in excess of 40 in any one workweek. If you’re exempt, you will not be entitled to overtime pay regardless of the number of hours worked.

Whether you’re exempt v. non-exempt isn’t dependent upon your job title, but instead on your jobs duties.

These job duties fall into different categories of “while collar” collar work and state that if you make more than a certain amount of money per week, then you are exempt from the overtime laws, and your employer need not pay you time and a half no matter how many hours you work in a week. These exemptions are typically divided into three categories: executive, administrative and professional. The exemptions also apply to certain computer professionals and outside sales personnel. Further, any employee who owns at least a 20% equity interest in the enterprise in which the employee is employed is generally recognized as exempt. This provision will cover many start-ups.

Some minor variations exist between state and federal law, so it’s important to consult with a knowledgeable Georgia overtime lawyer if you have questions.

In order for your employer to establish that your work falls under one of these exemptions, thereby disqualifying you from overtime, your employer must also prove that you are paid on a salary basis in an amount not less than $455 per week.

If you have accepted a position at a start-up, or are considering joining a start-up, it’s important to understand your employment rights, including whether you are entitled to overtime pay or not. For more information, please contact the skilled Atlanta wage and hour lawyers The Buckley Law Firm, LLC for an immediate consultation.

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