Many employers have questions regarding when overtime must be paid to employees. This post will discuss the federal regulations, but be aware that many states have more stringent guidelines, so be sure to check with your state to find out what rules apply to you (A link is provided at the bottom of this post).
The Wage and Hour Division (WHD) of the United States Department of Labor administers the Fair Labor Standards Act (FLSA). This law establishes standards for minimum wage, overtime pay, recordkeeping, and child labor.
The FLSA does not limit either the number of hours in a day or the number of days in a week that an employer may require an employee to work, as long as the employee is at least 16 years old, nor does it limit the number of hours of overtime that may be scheduled. However, the Act requires employers to pay covered employees not less than one and one‑half times their regular rate of pay for all hours worked more than 40 in a workweek unless the employees are otherwise exempt.
A workweek is a fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods. It need not coincide with the calendar week but may begin on any day and at any hour of the day. Different workweeks may be established for different employees or groups of employees.
Wages may be determined on a piece rate, salary, commission, or some other basis, but in all such cases the overtime pay due must be computed based on the average hourly rate derived from such earnings. This is calculated by dividing the total pay for employment in any workweek (except exclusions) by the total number of hours worked.
Payments that are not part of the regular rate include pay for expenses incurred on the employer’s behalf, premium payments for overtime work or the true premiums paid for work on Saturdays, Sundays, and holidays, discretionary bonuses, gifts, and payments like gifts on special occasions, and payments for occasional periods when no work is performed due to vacation, holidays, or illness.
Where an employee in a single workweek works at two or more different types of work for which different straight-time rates have been established, the regular rate for that week is the weighted average of such rates. That is, the earnings from all such rates are added together and this total is then divided by the total number of hours worked at all jobs.
There are some classes of workers who are exempt from overtime rules. For more information on the federal requirements, see http://www.dol.gov/compliance/guide/minwage.htm or http://www.dol.gov/whd/regs/compliance/whdfs23.pdf.
To find information regarding overtime rules that apply in your state, see http://www.dol.gov/whd/minwage/america.htm.
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