Overtime refers to additional payment for hours worked beyond the standard 40-hour workweek, which is seven consecutive 24-hour periods. Nonexempt employees earning less than $35,568 annually are required, by the United States (U.S.) Department of Labor’s final ruling from September 2019, to receive overtime pay.
Some states have differing regulations, such as requiring overtime pay after eight hours of work in a 24-hour period. However, the established rate of overtime pay is consistent, with a minimum of time and a half or an additional 50% of the employee’s regular hourly pay rate. This payment is made on payday and for the regular pay period.
The Fair Labor Standards Act (FLSA) requires overtime pay, referred to as nonexempt employees. However, some employees are exempt from overtime pay.
The federal government mandates that employers pay nonexempt employees an overtime rate of 1.5 times their regular hourly rate. Some employers choose to offer higher overtime rates than required or specify a different time threshold after which overtime pay begins.
Mandatory overtime is legal under certain conditions. Employers must ensure that employment contracts comply with applicable laws and regulations. Employers should consult legal experts to avoid legal issues.
Who is Exempt from Overtime?
Employees are exempt from overtime pay under certain conditions. To stay compliant, employers must monitor hours worked and calculate accurate overtime pay.
Regular work hours performed on specified holidays, weekends, and nights are paid at regular pay rates. The only time when overtime is to be paid is when working beyond 40 hours in that workweek. In some cases, employers offer higher overtime rates for extra work hours, although it is not required by law.
To ensure compliance with FLSA overtime requirements, employers must monitor and track hours worked, and accurately determine overtime pay.
How do I Calculate Overtime?
There are two ways to calculate overtime pay. One is for hourly employees and the other for salaried employees.
Hourly employees’ overtime is calculated by multiplying the number of overtime hours worked by 1.5 times the employee’s hourly pay rate. Salaried employees’ overtime has two options: divide the yearly salary by 2,080 hours worked per year or divide the weekly salary by the number of regular hours worked per week.