Understanding Utah Labor Laws for Salaried Workers

Utah Labor Laws Overview

Labor laws governing employees in Utah impose both minimum standards and maximum restrictions on employers. Utah is an at-will state. This means that, in the absence of a contract, an employer can terminate an employee for any reason not protected by statute. It also means that an employee is free to quit without notice at any time. Because Utah is an at-will employment state, however, Utah does not recognize wrongful termination as a separate cause of action unless the employer acted contrary to public policy. Nevertheless, generally applicable and employee-specific laws in Utah place restrictions on an employer’s ability to terminate an employee for certain specified reasons. In addition to its at-will employment doctrine, Utah observes certain laws regulating wages and hours, workplace safety, employee privacy, employee classification, and nondiscrimination.
Compared to federal labor regulations, Utah labor law is very similar. Other than differences in the minimum wage requirements, Utah liquor laws, and some unemployment compensation regulations, Utah labor laws are generally consistent with the basic federal laws . The Utah Minimum Wage Act, for example, is consistent with the provisions of the FLSA. Both laws protect employees against any retaliation from an employer who seeks to enforce his rights under the laws. As a further example, both the Utah Occupational Safety and Health Act (the "UOSHA") and the federal Occupational Safety and Health Act ("OSHA") establish workplace safety standards.
However, Utah’s Employee Online Privacy Act is more protective of an employee’s rights regarding online privacy than federal privacy laws. Utah law prohibits employers from requiring or asking for personal online account information or accessing it without the consent of the employee. The federal Computer Fraud and Abuse Act ("CFAA") requires the same consent to disclosure but only where an employee has violated an employer’s use policies. Under federal labor law, the CFAA is used to protect employers’ computer systems and in the protection of trade secrets. Utah’s UOSHA law furthers the federal interest in matters of workplace safety, but the two laws also diverge in matters such as the causes of action based on a federal law enacted in 1970.

Utah Salaried Employees Defined

Local labor laws define a salaried employee as an exempt position under FLSA (the Fair Labor Standards Act) which is the broad requirement for work hours and overtime in most professional roles. If your worker does not meet FLSA exemptions, then they should be paid an hourly wage. A salaried employee in Utah is compensated at fixed weekly, biweekly, or monthly income. Hourly workers aren’t guaranteed a specific amount of pay each week; overtime requirements also don’t apply in the same manner to salaried employees as they do hourly workers.
Usually, salaried workers can’t take on additional hours. They may be salaried at 50 hours per week, for example, but not be compensated at 1.5 times their regular wages if they work 70 hours for that week. If standard weekly hours exceed 40, Utah and federal laws require employers to pay time and half to workers in non-management roles. For example, if a non-management salaried worker earned $900 a week, the employer would have to pay that worker $11.25 an hour for working 70 hours per week in order to comply. That’s 10 hours, for $112.50 in compensation from the employer. The average employee in Utah earns about $22 per hour.

Salaried Minimum Salary

Utah is an "opt-in" state as far as adhering to the federal guidelines for minimum wage and overtime requirements. Thus, under Utah law, as long as you are meeting the federal wage requirements, you are also meeting the state requirements for such employees’ salaries.
State law, however, does require some additional understanding regarding the application of the minimum wage requirement to exempt employees. Pursuant to Section 34-40-103 Utah Code, "on and after July 1, 2012, an employer shall not pay an employee a wage that is less than $7.25 … per hour." This statutory provision does not distinguish between hourly and salaried employees, so employers need to be aware that regardless of whether you are paying an employee hourly wages or a salary, you must make sure the employee is receiving at least the required minimum wage per hour worked. In other words, if you have a salaried employee and the employee works 55 hours in a week, you must ensure that the salary corresponds to at least $7.25 per hour. For example, under the new minimum wage law, if your salaried employee is working 50 hours per week, your employee must be making a salary of at least $362.50, ($7.25 x 50 hours).
The minimum salary for a salaried employee under federal law is $455 per week, or $23,660 annually, to qualify for the white-collar exemptions. As the minimum wage has increased since federal regulations were first issued, your minimum salary threshold for your salaried employees has increased accordingly. For example, the white-collar exemptions were first issued in 1938, requiring that the minimum salary threshold be $190 per week to qualify. The minimum weekly salary threshold increased to $250 per week in 1949, and in 1961, it increased to $290 per week. In 1970, the weekly minimum salary threshold was increased to $350, and then later to $380. The weekly salary threshold increased to $450 per week in 1975. As a result of all these increases, the question arises – is your employee receiving at least the federal and state mandated salary threshold for "exempt" employees? The answer is, you obviously have an issue if your employee is receiving a salary less than the applicable state and federal minimum wage requirements, which as previously discussed is currently $362.50 per week in Utah.
The key rule of thumb is this: you must pay your salaried employee at least $7.25 per hour, or $290 per week for employees hired prior to 1976, $350 per week for employees hired from 1976-1985, $380 per week for employees hired from 1985-2004, and now at least $455 per week for "white-collar" employees who meet the job duties requirements defined under federal law.

Overtime Laws for Salaried Employees

The federal Fair Labor Standards Act, or FLSA, governs overtime requirements. The law considers two categories of overtime exemptions: executive employees and administrative employees. Utah state law has independent overtime laws that impose additional requirements beyond the FLSA.
Utah law allows an exemption from overtime if:
● The employee is inside sales, or
● The employee is a salaried employee who performs administrative functions, and
● The employee receives at least $27.63 an hour
The exemption for administrative functions simply requires that the employee have executive authority and latitude to make decisions that do not require approval by another person. They do not need to supervise other employees or have title in order to qualify for this exemption.
The administrative functions exemption does not apply to sales teams that are paid on commission, nor does it apply to stock clerks, secretaries, or working supervisors. It does apply to those who employ, train, or manage the employees. It also applies to any discipline or safety functions, or to full-time human resources or payroll specialists including office, accounts receivable, and accounts payable clerks.
Therefore, administrative workers must perform work that is focused on their designated employer’s activity, rather than work that improves or benefits the overall industry or specific area of business.

Paid Time Off & Benefits

For salaried employees, Utah employers are generally under no obligation to provide any stable schedule of vacation or paid time off (PTO). Employers can choose to offer such benefits at their discretion, but they must do so in compliance with any applicable policies or contractual obligations. Where employers have such arrangements, the terms must be in writing and usually include some manner of accrual for each pay period worked, the ability to "cash-in" earned PTO, carry over some balance of accrued PTO, and/or provisions under which an employee receives a lump sum upon termination, disability, retirement, or other separation from employment.
Employers that provide vacation and various types of PTO should take care to ensure that accrued time is not subject to forfeiture as a result of termination. Under Utah law, any payment for accrued PTO is mandatory if the employer’s policy regarding PTO has a "use it or lose it" provision that is not clearly defined and automatic, to include a specific date at which unused time will expire (e.g., "Any unused time will be forfeited the last day of the year."). As Utah courts have explained, an employer has no obligation to provide accrued PTO, but such time is earned when the employer has established a plan or policy providing for its accrual . For this reason, Utah employers should carefully draft policy declarations and other PTO provisions to include vesting terms that eliminate the risk that employees will lose earned vacation time.
Historically, a significant number of Utah employers would buy back unused vacation for a lump sum during termination, disability, or retirement for its employees. Now, however, such practice is being scrutinized. After the 2007 Utah Supreme Court case Austin v. Utah Power & Light Co., it appears such practice is forbidden where an employer provides for use of accrued time off but holds no earned time actually until a termination event. In Austin, the Utah Supreme Court determined that purchase payback did not constitute compensation and the practice essentially violated the statutory forfeiture prohibition. The court explained that even though the employer did not require employees to schedule vacation in order to receive payment for it, the plan required employees to forfeit unused vacation time at the end of the year, meaning that any vacation pay was not technically "earned." It appears that under Utah law, vacation is earned when it is accrued by the employee under a policy created by the employer. Thus, in order to avoid violating the statute, employers buying back vacation must do so prior to the employee earning it pursuant to such policy, e.g., following the end of a payroll period or work week.

Protection Against Discrimination

In Utah, the protection of salaried employees is governed by state law and federal law against unfair practices, as well as retaliatory discrimination. In addition to protecting individuals from wrongful termination, the law provides safeguards against a variety of other kinds of discrimination, including those based on sex, ancestry, religion, national origin, or status as a qualified person with a disability. It also prohibits discrimination based on what is sometimes called "sexual orientation," a term that includes preference as to sexual partners.
These protections include against sexual harassment on the job, which can be classified as either quid pro quo or hostile environment. The former occurs when a manager or supervisor uses his or her power to seek sexual favors for the purposes of hire or promotion, while the latter involves unwelcome sexual advances, inappropriate touching, and sexually charged or vulgar comments in the workplace.
Two statutes, Utah Anti-Discrimination Act (Utah Code Ann. § 34-38-101) and Utah Equal Pay Act (Utah Code Ann. § 34-40-101), prohibit harassment in the workplace, including actions by one employee against another.
Subsequently, if an employee feels he or she has been unfairly treated, they can file a claim with the Utah Anti-Discrimination and Labor Division, a division within the Utah Labor Commission.

Recent Legislation

It’s important to stay informed of any recent changes to labor laws, especially if you are an employer or an employee of a business that pays its workers a salary. For years, many employees and companies have been unsure whether or not employees who are solely paid a salary can be required to work unlimited hours during the week. The federal Department of Labor’s regulations provide for certain exemptions from the requirement of paying employees overtime when such employees (1) receive a salary, which (2) exceeds $455 per week. To qualify for overtime-exempt status, the Department of Labor’s regulations further require that employees’ primary duty must be performance of exempt work (e.g. executive, administrative, professional, outside sales, and more).
For many years, there has been some uncertainty for employers of hourly and salaried employees as to whether or not such employees are exempt in the sense that they are not entitled to overtime (i.e. paid at least 1.5 times their standard rate) and minimum wage (i.e. paid $7.25 per hour) under the federal Fair Labor Standards Act (FLSA) and applicable state laws.
This issue gained notoriety in Utah back in 2016 when a young employee, Jake Sherrell, decided to take on the roofing industry. As part of the terms of his employment with 1st Associated Roofing, Mr. Sherrell was required to sign an agreement that he would be paid at least $700 each week (i.e. his salary).
After working hard for a couple of months, Mr. Sherrell believed he was entitled to overtime because he worked, on average, around 70 hours per week for 1st Associated and only received his $700 (not the 1.5 times his regular rate of pay). Thus, Mr. Sherrell sued 1st Associated and its president while raising the legal issue of whether employees on salary with pay that exceeds $455 per week are exempt from the FLSA’s overtime and minimum wage requirements.
In March 2018, the United States District Court for the District of Utah issued an order on the motion for summary judgment filed by the president of 1st Associated (Joe Thomason) and stated that "No reasonable juror could find any agreement with [Mr. Sherrell] concerning his entitlement to overtime." This decision inspired the following blog post by legal counsel at Howard Lewis & Petersen P.C. that expressed confidence that the court would provide additional clarity with respect to how the FLSA applies to employees with pay that exceeds $455 per week.
Some employers may rejoice at the Court’s February 2018 decision. They liked the idea that they could call employees "managers" with "managerial responsibilities" and that those employees would not be entitled to overtime. Unfortunately for such employers, the Court’s decision represents a common-sense approach to Wyoming and federal labor laws as to what constitutes exempt and non-exempt employees, which is, in fact, a return to the federal Department of Labor’s current legal framework (and original intent of the FLSA).
While many employers may think this means that employees paid on a salary basis will be exempt from overtime, workers may believe otherwise and attempt to recover (by seeking help of an attorney) for unpaid overtime. I expect this tension will continue until the Utah Supreme Court or the Tenth Circuit weigh in on the issue. In the meantime, employers should make sure that employees who work more than 40 hours in a work week and who are paid on a salary basis receive at least 1.5 times their regular predetermined compensation for all hours worked over 40.

Utah Employee Resources

Salaried employees should be aware of the various resources available to them in Utah. The Utah Department of Workforce Services (DWS), the U.S. Department of Labor (DOL), and even legal aid societies are all available to answer questions and aid in investigations when needed.
The DWS is an excellent resource for employees in Utah who have specific questions about pay structure, benefits, and more. Its mission is to help Utahns find and keep jobs. DWS has specific pages for job seekers who are looking for information about pay structures, understanding unemployment numbers and the like.
The DOL Fair Pay and Safe Labor page allows employees to browse the many laws surrounding pay, including the Fair Labor Standards Act. Information on child labor , the minimum wage, and overtime pay can be found on the site.
Despite the name, the U.S. DOL does not provide legal services; instead, it works to enforce various labor laws and educate the public on proper procedure. Employees with questions about labor laws related to wages and hours, youth employment and its impact on state laws such as workers’ compensation, and discrimination and retaliation can all turn to the DOL for information.
Any individuals with additional questions or issues can also contact the following lawyers for guidance and specific information on their situations:
For those employees who may qualify under the low-income threshold, Utah also has various legal aid societies which can provide assistance in a range of issues.