Overtime refers to the additional payment for hours worked by an employee that exceed a standard workweek of 40 hours. The Fair Labor Standards Act (FLSA) is a federal law regulating workers’ overtime payments. According to the FLSA, the company must settle overtime at a time and a half of an employee’s regular salary for all the hours worked over forty hours per week.
Employees with a fixed salary and employed in a professional, administrative, or bona fide executive capacity are exempt from the overtime requirement of the FLSA.
But, according to the final ruling of the U.S. Department of Labor in September 2019, nonexempt workers earning less than $35,568 per year must get paid for overtime. An employee must receive their overtime payment on their scheduled payday.
How Do Different States Count Overtime?
Not all the states in the U.S. count overtime on a weekly basis. Many states require employers to pay their employees overtime if they have worked over 8 hours in a 24-hour period. However, the overtime pay rate remains consistent: time and a half or an extra fifty percent of an employee’s regular salary.
Can Salaried Employees Get Overtime?
Yes, salaried employees can be eligible for overtime unless they get exempted from making a particular sum of money and performing specific duties. Legally, there is no rule stating that a salaried employee cannot get overtime pay, but they have to be under some criteria to be considered nonexempt employees.
Which Employees Get Overtime Pay?
Employees covered by the Fair Labor Standards Act (FLSA) law who are not exempt must receive overtime pay for overtime hours. Only unexempt employees are eligible for overtime.
Employers do not qualify employees for overtime under the following conditions:
Employees who are paid a fixed salary at the standard salary level of $684 per week or $35,568 annually.
Highly compensated employees (HCEs) who have earnings of more than $107,432 annually.
Workers, when categorized as volunteers, seasonal employees, independent contractors, or outside salespeople.
“White-collar” employees who meet the salary requirement for being HCE.
What is Regarded as Overtime?
An employee working over 40 hours a week or over 8 hours daily triggers overtime. Here are some other conditions for overtime consideration.
Seven consecutive 24-hour periods(recurring period of 168 hours) must make up a workweek.
The workweek does not have to fall on a specific week of the calendar.
The 24-hour period can start at any hour of the week.
The workweek can start on any day of the week.
Employers must not average hours over two or more weeks.
What is Disregarded as Overtime?
Employers can refuse to pay overtime legally when:
Working on weekends (Saturdays & Sundays)
Working on regular days of rest
Holidays (religious, federal)
Although not required by FLSA law, some employers pay workers a higher overtime rate for working on these specific days.
How Can an Employer Stay Compliant with Overtime Requirements?
The Fair Labor Standards Act (FLSA) requires employers to comply with the overtime law by:
Determining if the company is eligible for the federal overtime conditions. A company falls under the law when its annual income is more than $500,000, and the work is mainly interstate commerce.
Determining which exempt and nonexempt employees are eligible for overtime pay.
Calculating the overtime pay with time and a half pay of an employee’s regular salary.
Providing the employee with their earned overtime pay and paycheck on scheduled payday.
Proving compliance with FLSA overtime requirements by keeping records of overtime payments to employees.
How to Calculate Overtime Pay?
Calculations for hourly and salaried employees are different, and an employer must use two different ways to calculate them.
1. Overtime Calculation for Salaried Employees
An employer can use two options to calculate the overtime pay of salaried employees.
Divide the annual salary by the annual work hours(based on a 40-hour workweek and 40-hour holiday week) to get the employee’s hourly rate. You can use the calculation for nonexempt employees(mentioned below) to get overtime.
Divide the weekly income by the work hours per week to get the employee’s hourly rate. Use the nonexempt employees' overtime calculation(mentioned below) to get results.
2. Overtime Calculation for Hourly Employees
Employers can calculate the overtime of hourly employees in three steps.
Step 1: Multiply the time and a half(1.5) rate with the employee’s hourly rate.
Example- $12 per hour earning for a 40-hour workweek.
So, $12 x 1.5 = $18 overtime pay per hour.
Step 2: Now, multiplying the value of step 1 by the employee’s overtime hours gives you the overtime pay.
Example- $18 overtime pay per hour multiplied by the extra 6 hours over the 40-hour workweek.
So, $18 x 6 overtime hours = $108 of total overtime pay.
Step 3: Add the employee’s overtime pay with their 40-hour workweek pay to get the overall salary estimation with overtime.
Example- $108 of total overtime pay added to the regular paycheck of $550.
So, $550 regular pay + $108 overtime pay = $658 total paycheck.
Can Overtime Pay be Waived?
According to FLSA federal law, employers do not have the right to waive overtime pay even if an agreement or announcement has been provided to the employees.
To clarify, “a contract between the employer and the employee of agreement on 8 hours a day and 40 hours in a week will be only counted as work hours” will not waive the employee’s right to compensation for overtime pay. Likewise, there are many more things that cannot waive overtime pay.
Moreover, if the employer fails to comply with the FLSA requirements, they will face penalties for not working according to labor law.
Can an Employer Mandate Overtime?
Yes, employers can mandate overtime for employees and fire them if they refuse to participate. Mandatory overtime is legal according to the Fair Labor Standards Act (FLSA) unless there is an employment contract or labor union to limit it. FLSA also has no limitations on how many overtime hours an employer can require an employee to work.
Are There any Alternatives to Mandatory Overtime?
Employers choose to work employees overtime to be more cost-effective and threatening to fire someone seems like a much easier way to make someone work.
But there are alternatives to mandatory overtime that employers can use to increase employee productivity.
Allow employees to have the chance to volunteer for overtime shifts with overtime pay.
Use a staffing agency to hire a temp to handle the extra workload.
Hire hourly or part-time employees to cover the overtime shifts.