NCRLA

North Carolina Restaurant and Lodging Association

Wage and Hour

Minimum Wage

An employer must pay its employees at least the minimum wage for all hours worked, and time and one-half overtime pay based on an employee’s regular rate of pay for all hours worked more than 40 in a work week unless the employee is exempt (see below). The minimum wage in North Carolina follows the current federal minimum wage of $7.25 an hour. According to the North Carolina Wage and Hour Act (WHA), an employer is not required to pay its employees more in wages than is required by the minimum wage and overtime pay provisions. Likewise, an employer is not required by law to give mandatory wage benefits such as vacation pay, sick leave, jury duty pay, and holiday pay to its employees regardless of how many hours a week they work.

North Carolina follows the federal Fair Labor Standards Act (FLSA), which allows employers to pay a lower hourly minimum wage if that wage plus the tips adds up to at least the full minimum wage for each hour worked. If not, the employer must make up the difference to reach the minimum wage. In North Carolina, employers can pay tipped employees an hourly wage of $2.13 as long as the employee’s tips bring the total hourly wage up to the state minimum wage.

Overtime Laws

Exempt employees are not eligible for overtime pay for hours worked over 40 in a work week because of their rate of pay and type of work that they do. Non-exempt employees must be paid time and a half for any hours over 40 worked in a work week.

Executive, administrative, professional, and outside sales employees (as defined in Department of Labor regulations) who are paid on a salary basis are exempt from both the minimum wage and overtime provisions of the FLSA.

To be considered “exempt,” employees must generally satisfy the following criteria:

  1. Employees must earn a weekly salary that meets the minimum requirements, currently not less than $684 per week.
  2. With very limited exceptions, the employer must pay employees their full salary in any week they perform work, regardless of the quality or quantity of the work.
  3. In addition, the employee’s primary job duties must meet one of the following categories of exemptions:
    • Executive employee exemption – All the following must apply:
      • The employee’s primary duty must be managing the enterprise or managing a customarily recognized department or subdivision of the enterprise.
      • The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent.
      • The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees must be given particular weight.
    • Administrative employee exemption — All the following must apply:
      • The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than the minimum requirements, currently $684 per week.
      • The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.
      • The employee’s primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.
    • Learned professional employee exemption – (Note: This exemption does not typically apply in the hospitality industry; however, it would apply to employees whose jobs were accounting or in-house legal counsel. You should contact your attorney if you have questions whether an employee, such as a bookkeeper, falls under this category.) All the following must apply:
      • The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than the minimum requirements, currently $684 per week.
      • The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character, and which requires the consistent exercise of discretion and judgment.
      • The advanced knowledge must be in a field of science or learning, and the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
    • Creative professional employee exemption – (Note: This exemption does not typically apply in the hospitality industry; however, it would apply to employees whose jobs are graphic art or web design, for example. You should contact your attorney if you have questions whether an employee, such as a social media marketing specialist, falls under this category.) All the following must apply:
      • The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than the minimum requirements, currently $684 per week.
      • The employee’s primary duty must be the performance of work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.

There is also an exemption for “highly compensated” employees who customarily and regularly perform at least one of the exempt duties or responsibilities of an executive, administrative, or professional employee. These employees must receive a total annual compensation of at least $107,432 to qualify for this exemption.