The U.S. Department of Labor (DOL) administers a number of federal employment laws, including the Fair Labor Standards Act (FLSA). The latter is responsible for establishing the minimum wage, record-keeping, child labor standards and overtime pay laws. The FLSA's overtime laws apply to the employer and the employee.
Qualified employees are eligible for overtime pay for hours worked above 40 in the workweek. The DOL narrowly-defines overtime qualifications; therefore, employers can check with their regional DOL labor board (see Resources) to know which employees are covered under the FLSA’s overtime protections laws. Generally, overtime protection laws extend to nonexempt employees working for establishments with FLSA coverage. The latter includes businesses that earn yearly revenue of at least $500,000, government agencies, schools, hospitals or those that engage in interstate commerce. Nonexempt employees include those not exempt from overtime protection laws.
The DOL notes that employers must generally pay qualified workers overtime at 1.5 times the employees’ regular pay rate. The employee must physically work a minimum of 40 hours for the week to get this overtime rate. For instance, if he works 37 regular and takes seven vacation hours, the employer should pay all 44 hours at his regular pay rate. But if he works 46 hours for the week, he’s due overtime for six hours.
Overtime should be paid on the employee’s next regularly scheduled paycheck, with the regular hours worked during the pay period. Overtime does not apply to time worked on weekends, holidays and the employee’s scheduled days off, except if they cause him to incur overtime. Furthermore, if the employer engages in rounding practices, such as rounding employee time up and down to the closest quarter-hour, it must pay overtime if rounding causes the employee to incur overtime.
The DOL notes that payment on a salary basis means that the employee receives a predetermined amount of pay weekly or on a less frequent basis. Under the FLSA many salaried workers are exempt from overtime protections laws; hence salaried-exempt status. This includes administrative, professional and executive workers; outside salespersons; and some highly compensated and computer employees. To obtain this exempt status, these employees must pass the job and/or wage-based requirements the department administers.
For example, an administrative worker is exempt if she earns a salary or fee of at least $455 per week; she performs frequently non-manual labor directly linked to management or the overall business function; and if she commonly uses personal judgment and discretion when called for. Subsequently, the employer cannot label the worker salaried-exempt because it doesn’t want to pay overtime.
Employees paid a fixed salary and not exempt from overtime protection laws are due overtime, if worked. For instance, if the employee receives a fixed salary for a 45-hour workweek, the employer must pay the full salary plus five hours at one-half the employee’s regular pay rate.
- U.S. Department of Labor: Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the Fair Labor Standards Act (FLSA)
- U.S. Department of Labor: Overtime Pay Requirements of the FLSA
- Washington State Department of Labor & Industry: State vs. Federal “White-collar” Overtime
- U.S. Department of Labor: Salary Basis
- Overtime Advisor: Don't Round Time Worked and Deny Employees Overtime Pay
- check in macro image by Alexey Klementiev from Fotolia.com