Topic 5: Overtime
As an employer, if Sam requires or allows her employees to work overtime, meaning more
than 40 hours in a week, it's generally required that she pays them premium pay for
those extra hours.
Unless specifically exempt, covered workers must be paid one and a half times their regular
hourly rate of pay for any hours over 40 they work in a workweek.
Many people refer to this as "time-and-a-half."
This overtime requirement applies whether the worker is paid: by the hour, on a salary,
on a piece rate, a day rate, by the job, or under some other arrangement.
Here are some examples:
Amanda works for Sam at her fast food franchise, which is covered by the FLSA.
She does not qualify for any exemptions from the overtime requirement.
She gets paid $10 per hour, and last week she worked 41 hours.
So that's 40 hours at $10 per hour, which equals $400.
Plus 1 hour of overtime, at one-and-a-half times her regular rate: (1 hour of OT) x (1.5)
x ($10) = $15
Amanda is due $415 for this workweek.
It is important to remember that simply paying an employee a salary does not necessarily
mean that the employee is not entitled to overtime for working more than 40 hours in a week.
Paul also works for Sam's fast food franchise in the office as an assistant and gets paid
a salary of $400 for a 40 hour week.
Last week, he worked 50 hours.
Paul's $400 salary, divided by the 40 hours he and his employer understand that it covers,
produces an hourly equivalent of $10 per hour.
His additional overtime pay for that workweek is calculated as follows:
(10 hours) multiplied by (1.5) multiplied by ($10) equals $150 in overtime due.
(10 hours over 40) x (1.5) x ($10 per hour) = $150 in overtime due.
Paul is due his salary, $400, plus $150 for his overtime hours, for a total of $550.
The FLSA and its overtime requirements apply on a workweek basis.
An employee's workweek is seven consecutive 24-hour periods, starting on any day and at
any time the employer chooses (for example, 12:01am on Mondays).
If an employee works more than 40 hours during this 7-day period, overtime is due.
Even if payroll is run every two weeks, the number of hours worked must be totaled separately
for each 40 hour workweek.
That means if Amanda works 45 hours in week 1 and only 20 hours in week 2, she is due
5 hours of overtime for week 1.
All hours worked for the same employer are added together each week, even if they occur
at different worksites.
So, if Amanda works at more than one of Sam's restaurants, she needs to total all her hours
worked in the workweek, at all locations, to determine if overtime is due.
Let's say she worked the following schedule this workweek: 20 hours at Sam's Restaurant A,
15 hours at Sam's Restaurant B, and 10 hours at Sam's Restaurant C ... which totals 45 hours.
Sam's Restaurant A: 20 hours Sam's Restaurant B: 15 hours
Sam's Restaurant C: 10 hours Total: 45 hours
In this example, Amanda has worked 5 hours of overtime for the workweek.
These five hours must be paid at one and a half times Amanda's regular hourly rate.
To know how much is due in overtime, employers must calculate
an employee's "regular rate" for the workweek.
An employee's regular rate takes into account all wages for employment.
Wages include non-discretionary payments, like production bonuses, and any food, lodging,
or other facilities the employer provides for the employee's benefit.
Some types of payments to employees do not have to be counted as wages, however, like
gifts, holiday premiums, discretionary bonuses, and reimbursements for expenses.
Here's an example: Last week, Jason worked for Sam for 50 hours at $10 per hour.
He also earned a $50 production bonus for meeting food waste guidelines.
To calculate Jason's "regular rate" you take 50 hours and multiply it by $10,
which equals $500 dollars.
Then add the production bonus which is $50.
The TOTAL STRAIGHT TIME EARNINGS due, before overtime equals $550.
50 hours x by $10 = $500 dollars + the production bonus of $50 dollars
Total straight time earnings due, before overtime: $550 dollars
Divide the total straight time earnings by the number of hours Jason worked:
$550 divided by 50 hours equals $11 per hour regular rate.
$550.00 / 50 hours = $11/hour regular rate
Jason's overtime, then, is due based on a regular rate of $11 per hour, not $10 per hour.
The bonus in this case had the effect of bumping his regular rate up $1 per hour.
It's also important to note that Sam cannot "bank" employees' overtime hours and
pay them out in later workweeks.
She also cannot offer her workers "comp time" in lieu of cash when they work overtime.
Only public agencies or other government employers are allowed to offer compensatory time off
for overtime hours.
Some workers don't have to be paid overtime because of the types of jobs that they hold.
The law includes some specific "exemptions" that define situations where workers don't
have to be paid extra when they work more than 40 hours in a workweek.
For example, an exemption from the overtime requirements of the FLSA applies to most drivers,
driver's helpers, loaders, and mechanics who're employed by a motor carrier and whose
duties affect the safety of operation of the vehicles.
When employers fail to pay employees overtime they have legally earned, those employers
have violated the FLSA.
FLSA violations can result in back wage liability, additional damages due to the employees involved,
and even financial penalties to the employer.
If you have questions about overtime, or other wage and hour topics, please visit our website:
DOL.GOV/WHD or call us at 866-4US-WAGE for more information.
All calls are free, and confidential.
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