Understanding Overtime Policies and avoiding federal wage…

Understanding Overtime Policies and avoiding federal wage and hour investigations is more important now than ever. Do you know the answers to these frequently asked questions?

What is overtime pay?

Nonexempt employees who are covered by the protections of the Fair Labor Standards Act (FLSA) of 1938 must be paid an overtime premium of one and one-half times their regular rate of pay for any hours worked in excess of 40 hours in a workweek.

Who is exempt from receiving overtime pay?

An employer may designate an employee as “exempt” from receiving overtime pay if the employee meets certain job duties tests and is paid on a salary basis at no less than $684 per week beginning January 1, 2020.

Exemptions from the FLSA’s overtime pay provisions for executive, administrative, professional, computer and outside sales employees are the most used.

When is overtime pay due?

Generally, overtime pay is due any time a covered, nonexempt employee works above 40 hours in a workweek. Overtime pay is not required for work performed on holidays, Saturdays, Sundays or other regular rest days, unless the hours worked on these days are overtime hours.

In order to minimize overtime-related expenses, employers may limit the number of hours their employees may work. With some exceptions, employers may also require their employees to work above 40 hours in any workweek (if the overtime premium is paid accordingly).

Some exceptions apply to the overtime pay requirements for law enforcement and fire protection employees and nursing care facilities employees.

How is overtime pay calculated?

Overtime hours and regular rates of pay determine how much protected employees must be compensated in overtime pay. This premium is calculated by multiplying an employee’s overtime hours (or hours worked over 40 in a workweek) by one and one-half times the employee’s regular rate of pay.

For example, if the employee worked 43 hours in a workweek and his/her regular rate of pay is $10, the overtime pay due would be (43 – 40) x ($10 x 1.5) = 3 x $15 = $45.

State overtime laws may be different from federal overtime laws. In these cases, employees are entitled to the overtime pay standard that would provide the higher rate of pay.

Where to learn more about overtime pay?

Contact the U.S. Department of Labor’s Wage and Hour Division or call Vested HR at 1-844-928-0925.

Vested HR can give your business power and support. Let us help you better understand labor management while you focus on what you do best!

Toni Curling, M.Ed., SHRM-CP

Client Service Manager

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