CT Labor Laws for Salary Employees
Connecticut labor laws apply to employees regardless of whether they are paid hourly or via a salary. In Connecticut, the general requirements for employees paid on a salary and non-exempt (as defined by the FLSA), require the payment of minimum wage (currently $15 per hour as of 10/1/21) and overtime when working over 40 hours in a work week (the maximum is 45 hours in some sectors). o There is no requirement that an employee be exempt to receive payment at a rate no less than $1,080 per week ($56,160 annually).
In Connecticut, the minimum salary for an employee to be exempt is currently $1,072.00 per week, effective 9/1/20 ($55,745 annually). This is somewhat less than that of the Federal Fair Labor Standards Act ($684 per week, or $35,568 annually). The restrictions under Federal Law are more stringent than those of Connecticut as the employee must be paid a fixed and predicable salary every week, regardless of the quantity of work, full-time or part-time and be paid no less than the minimum amount ($684) each week. However, the state requirement differs from that of the federal as it further requires that the employee be paid $1,072 per week ($58,192 annually) to be considered exempt under the state law . o Four primary exemptions applicable to most employers, prevailing (notwithstanding variances found under other local laws) and commonly seen with most management-level employees are: Executive Exemption requires that a salaried employee be paid at least $23.75 per hour ($1,032.00 per week) and that:
An Administrative Exemption requires that the worker be paid at least $23.75 per hour ($1,032.99 per week) and that the employee’s primary duty includes performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customer and is customarily and regularly exercised discretion and independent judgment with respect to matters of significance.
The Learned Professional’s Exemption requires that the employee be paid at least $23.75 per hour ($1,032.96 per week) and that the primary duty of the employee is the performance of work requiring knowledge of an advanced type in a field of science or business that is customarily acquired by a prolonged course of specialized intellectual instruction and study evidenced by a recognized degree.
The Creative Professional’s Exemption requires that the employee be paid at least $23.75 per hour ($1,032.96 per week) and that the primary duty of the employee is performance of work requiring invention, originality or talent in a recognized field of artistic or creative endeavor such as music, writing, acting, the arts and the creative talents.
Minimum Salary Threshold
Employers are sometimes under the mindset that if they classify a worker as salaried, they are, by definition, not eligible for overtime. After all, when you add up the salary for the hours usually worked, the resulting number is higher than what the employee would be paid at the standard 40 hour/week rate. Right? Wrong.
According to federal and state labor laws, an employee is considered exempt from overtime pay requirements only if he or she meets specific salary and duties tests. The salary test is that the employee is paid at least $684 per week for salaried employees. The duties test is generally that the employee has certain decision making or supervisory authority for themselves and/or others. While salaried employees are generally exempt from overtime, if they are not paid at least $684 per week, or if they do not meet the duties test, they are entitled to overtime.
Connecticut state law recently changed the salary requirement. As of October 1, 2023, the minimum salary for exempt employees in Connecticut will increase to $1,000 per week. At $1,000 per week, the annual salary is $52,000 as compared to the $35,568 currently required under federal law.
Employers may adopt a higher minimum salary for exempt classification. However, the employer must immediately pay overtime to any employee who is working 40+ hours per week (or the threshold of hours established by the employer) who is not being paid at least $1,000 per week.
Employers should examine whether they have employees covered by state and federal wage and hour laws. If an employee does not make at least $1,000 per week, employers should review the duties performed by the employee, because that employee may be entitled to be paid overtime.
Exempt vs Non-Exempt Salary Workers
CT labor laws regarding salaried employees classify them as either exempt or non-exempt from overtime pay eligibility. For the most part, the difference between exempt and non-exempt is based on job position; however, the classification may depend on how an employee is paid and the specific duties they perform.
Commonly, certain positions that require an employee earn a minimum salary are presumed to be exempt: bank officers, executive assistants, licensed attorneys, certified public accountants, qualified practitioners of accounting, certain executive- and professional-level non-profit employees, outside salesmen, members of a board of directors, certain members of religious institutions and professors are some titles associated with exemption from overtime pay eligibility.
For the typical employee classification, the US Department of Labor replaces the CT DOL in various issues concerning overtime and minimum wage pay. All "white collar" professional, administrative and executive employees are exempt from both CT and federal overtime laws when they meet certain salary and job duties requirements as defined by the Fair Labor Standards Act (FLSA).
However, there may be cases where a position is not typically considered an exempt job position, yet the employee may be classified as exempt under CT applicable law. Employing a salaried employee in a job position that is not normally classified as exempt does not automatically render them eligible for overtime pay.
Non-exempt employees are almost always hourly employees. This means non-exempt employees must be paid time-and-a-half for any work performed beyond 40 hours per week. Exempt employees are not entitled to overtime pay.
Clarification is necessary when determining exemption status: Indeed, there are certain employees who are paid a salary and are still considered non-exempt from overtime pay, i.e. they are not exempt from state and federal laws necessitating overtime pay.
For example, working owners, sole proprietors and company officers are exempt from state and federal minimum wage pay provisions and overtime payment regulations. Working owners of companies pay themselves a fair wage that affords them subsistence. Therefore, the company is not required to comply with minimum wage and overtime laws when doing so would place an excessive financial burden on the organization. Although, the worker’s officers and shareholders must receive fair wages equal to their efforts to ensure the regulations set forth by the Connecticut DOL.
Currently, well-educated, full-time white collar workers are not subject to overtime if their salary is $35,600 or more per year, or $684 per week. Furthermore, certain highly skilled white-collar employees are not subject to overtime pay if they can pass the three tests for "true executive" or "administrative" professional workers. The three tests (salary basis test, duties test and payment test) determine whether or not an employee qualifies for exemption status from overtime payment.
Overtime Requirements
For most Connecticut employers, there is a gray area with respect to whether salaried employees do in fact receive overtime. To be clear, the confusion is because employers may think that paying someone a salary means that they fall into the "administrative" exemption and do not receive overtime.
Nothing could be further from the truth. In fact, an employee paid on a salary basis may actually be entitled to overtime if he or she is not classified yet as exempt.
Let’s "unpack" this for a moment. A true "salaried" employee in Connecticut, who gets paid a flat fee every week without regard to the number of hours worked (and without the goal of providing them with more than the minimum wage in mind), may receive overtime if his or her job is not classified properly. The FLSA regulations, 29 C.F.R. § 541.602(a) state:
Employees covered by the act are entitled to a minimum wage for all hours worked, but they are not entitled to receive overtime pay for hours worked over 40 in workweek. However, if the employer and employee have a prior understanding or agreement as to overtime pay, the employee is entitled to overtime at the prescribed rate for all hours worked in excess of the applicable workweek standard, and also for those hours worked in excess of the employee’s regular scheduled number of hours each day. . . . For example, if an employee whose regular, unaltered weekly work schedule is 9:00 a.m. to 5:00 p.m., exclusive of meal periods, works one day overtime from 2:00 p.m. to 6:00 p.m., there is an implied promise to pay the employee for the overtime hours at the regular rate of pay, plus one half of the regular rate of pay for the overtime hours . . . . On the other hand, extra compensation for Saturday, Sunday, holiday or night work, is not overtime pay within the meaning of the act.
The Department of Labor does NOT consider the straight time portion of a salary as the base rate of pay for the purpose of overtime.
In other words, if the employee is working overtime in a week, the employer must calculate the time worked over forty and pay him or her time and a half over their regular rate of pay for the week.
So let’s use an example to illustrate this. Say an employee earns a salary of $400/week and is generally expected to work 9-5 without incident, with an unpaid lunch period. In this case, the employee generally makes about $50/hour. However, when overtime starts to kick in, on that Saturday, the employee works from 9-5 on Saturday for a total of eight hours. The employer must pay the employee overtime on that day at $75/hour, which is time and a half.
If the employee was a salary of $400/week, but put in 80 hours of work, s/he would get paid overtime on 40 hours of work because you cannot pay overtime on a salary. Do not make this mistake.
While the basic premise above sounds simple, the issue can become far more complex when calculating overtime for various non-compensatory benefits and compensation. There are some very strict rules and regulations around "paying" an exempt employee who performs non-exempt work.
Paying someone a salary does not change their classification. If s/he is NOT exempt from overtime, that employee must be paid by the hour and receive all applicable minimum wage and overtime pay as well.
Time Off and Leave Rights
Salaried employees in Connecticut must also be paid for sick leave and any other leave to which they may be entitled pursuant to federal or state law. However, employers are free to provide unpaid time off as an employee benefit.
Under the federal Family and Medical Leave Act (FMLA), employers of 50 or more employees, within a 75-mile radius, must permit those employees who have been employed at least 12 months and worked 1,250 hours in the preceding 12-month period unpaid family and medical leave for up to 12 weeks (within a 12-month period) during a single 12-month period (though you cannot require the employee to take the leave all at once or to schedule it in such a way that results in the employee taking more than 12 weeks of leave in that 12-month period). If an employer has a more generous policy, such as granting a father leave for the birth of a child – as opposed to unpaid leave under the FMLA – the employer must still allow the employee 12 weeks of unpaid leave under the FMLA.
Connecticut’s FMLA law is similar to the federal law, except that it covers employers with 75 or more employees within a 750 mile radius of each other. Further, an employee must have worked a total of 1,000 hours in the preceding 12-month period (not 1,250 hours), and must have been employed for the employer for an entire year (not 12 months) to be eligible for leave. Connecticut also has a law expressly requiring the Department of Labor to draft regulations defining an employer as one who has employed at least 20 employees within a 75-mile radius. Neither the regulations nor the definition have been drafted as of this writing, but it’s important to be aware that a larger number of employers may fall under the umbrella of the Connecticut FMLA when the regulations are finalized.
In addition, Connecticut law does not require a minimum number of employees at a worksite before paying sick leave, a point confirmed by the Office of Legislative Research in December 2011 (i.e., employers must pay sick leave whether they employ 50, 10, or just one employee). Therefore, even if not required, sick leave must be paid and one of the best practices on providing sick leave is to include it in a written policy.
Termination and Severance
However, because salaried employees will also be fired from time to time, several laws also focus on not just the job separation, but also the type of severance that is, or must be, provided. One such law is the Connecticut Wage Claims Act. It requires immediate payment of final wages due at the next regular payday after termination. Thus, anyone fired in March would receive his or her last checks in April, assuming the pay schedule was biweekly. A similar protection is set out in Section 31-76q of the Connecticut General Statutes, which requires the reasonable payment of five days of accrued vacation time when employment is terminated. Connecticut is also one of the few remaining states to have a mandatory severance law (Conn. Gen. Stat. § 31-76d). As a general rule, that law requires severance payments when an employee has been with the company for at least a year and the employee is terminated involuntarily by reason of downsizing or closing of the employer’s operation in the state . The amount paid is determined according to a statutory formula based upon wages. (For additional details, see DOL Guidelines, here.) Many employers are surprised to learn that a wage payment law exists, let alone a severance payment law. These laws and a number of others often go unchallenged. Now that they are known, hopefully they can be acted upon in a better and more pro-active manner. Former employees also may be entitled to receive unemployment compensation for a limited period of time if they are involuntarily terminated from employment. In that same vein, Employment Security Division, Unemployment Compensation Employee Information Handbook (2006) [pdf file], provides guidelines as to how employees can apply for an unemployment compensation benefit.