I wanted to talk this week about estimating labor, but while I was writing, I decided it made sense to dispel some common myths about labor in our industry first. That’s the topic of this week’s post: what we don’t know that we need to know about labor in theatre.

Myth 1: If an employee has a title that denotes “supervisor,” then they are exempt from minimum wage and overtime.

The US Department of Labor has very strict—and very clear—definitions of those classes of employees who are exempt from overtime and minimum wage requirements under the Fair Labor Standards Act (FLSA). FLSA provides for four major categories of employees who are exempt from both minimum wage and overtime regulations: executive, administrative, learned professional, and outside sales employees. The important factor in all of these exemption categories is that the determination of whether an employee qualifies is based on a description of duties and responsibilities, not job title. For example, to qualify as an executive employee an employee must meet all of the following requirements:

• The employee must be paid on a salary basis at a rate not less than $455 per week
• 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 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 in status of other employees must be given particular weight.

Based on these requirements, for example, an employee with the title, “lighting supervisor,” would not be considered exempt if there were not at least two full-time employees working in the lighting department, title notwithstanding. Similarly, a carpenter paid $500 per week would not be considered exempt, because although they meet the salary requirement, their primary duty is not managing the enterprise or a department within the enterprise. Any employee not meeting the [equirements set forth by the Fair Labor Standards Act (or a state or local regulation with a greater standard) must be paid overtime, and their wage must meet minimum wage requirements.

Myth 2: If I pay an employee a salary, they are exempt from overtime.

Although being paid a salary is one key requirement for an employee to be exempt from overtime, unless an employee meets all of the requirements to be classified as exempt, they are still covered under the Fair Labor Standards Act as employees to whom overtime must be paid.

Overtime is based on an hourly wage rate. For employees paid a weekly salary, their overtime rate is based on a determination of their straight rate, based on the number of hours they’ve worked. For example, an employee being paid $500 per week who works 50 hours, is paid a straight rate of $10/hour; they would be paid $500 for their regular pay, plus an overtime rate of one-half the straight rate ($5/hour) for the overtime hours worked (10 hours), for a total pay of $550 for that week. (See this fact sheet.)

Consider a carpenter paid a salary of $500 per week. One week they may work 40 hours; they’d be paid $500. During load-in, however, they may work as many as 60 hours; they will have to be paid an overtime premium of $4.17 an hour for the 20 hours of overtime work that week (based on a straight rate of $8.33, or $500/60 hours).

Myth 3: Minimum wage isn’t a consideration when paying an employee a salaried wage.

As demonstrated above, being paid on a salary basis is not the only requirement to be met before an employee is considered exempt from minimum wage regulations. Consequently, employees who are not considered exempt from minimum wage cannot be paid a salary which results in a straight wage rate less than minimum wage (currently $7.25, depending on your state). This is based on the straight rate calculated each pay period. (See this DOL fact sheet.)

Consider a carpenter paid $400 a week. During a week in which this employee works 40 hours, her straight rate is $10/hour—well above minimum wage. However, if she were to work 60 hours, her straight rate drops to $6.67/hour, which is below minimum wage. To pay her $400 for a 60 hour work week is illegal. In order for this carpenter’s straight rate to stay above minimum wage, she cannot work more than 55 hours in a given week. (Additionally, as discussed above, she’d be eligible for 15 hours of premium overtime pay, at a rate of $3.63/hour.)

Myth 4: An “intern” isn’t subject to minimum wage or overtime considerations.

The Department of Labor has a very narrow definition of “intern” as related to overtime and minimum wage regulations. Simply being called an “intern” (or “apprentice”) doesn’t make a person exempt; the position must meet six specific requirements:

• The internship must be similar to training which would be given in an educational environment
• The internship experience is for the benefit of the intern
• The intern does not displace regular employees
• The employer providing training derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded
• The intern is not necessarily entitled to a job at the conclusion of the internship
• The employer and intern both understand that the intern is not entitled to wages for the time spent in the internship.

If all of these conditions are not met, the intern is entitled to minimum wage and overtime protections under the Fair Labor Standards Act. For example, if, during a summer season, the labor provided by technical or design interns and/or acting apprentices is absolutely necessary to the completion of a set build, light hang, or costume construction process, those interns and apprentices must be paid minimum wage, and must be paid a premium for overtime work.

It is not unheard of to try and “throw people at the problem” when we encounter a set that is too big to complete in the time we have available. However, simply working the shop for longer hours is not an acceptable solution—in doing so, legally we are obligated to pay overtime to non-exempt employees, and this can have a major impact on the labor budget and cash flow for an organization. We may often want to resort to bringing in interns and apprentices to help complete the build; if we find ourselves in a situation where we must utilize these interns and apprentices to get the job done—say, instead of hiring overhire carpenters— legally we are obligated to pay them at least minimum wage, which again can have a major impact on the bottom line. It is important to keep these considerations in mind when assessing the size of a build and the time required to complete a project.