The FLSA (Fair Labor Standards Act) defines overtime as the hours worked above a stipulated threshold, which is 40 hours each workweek. FLSA uses a different overtime threshold for certain jobs.
For some jobs, ‘overtime’ may be used differently, indicating the work duties performed outside of an employee’s regular schedule. Employers are free to define ‘overtime’ however they wish, provided that the actual overtime pay is not less than FLSA’s minimum requirements. Employers may also adjust work schedules for the workweek to avoid employees from working overtime (under the FLSA standards). FLSA’s overtime rules do not come into force until employees’ total work hours exceed 40 hours for a week.
Employees are required to be paid over their regular rate of pay after working more than 40 hours in one workweek. This amount should be at least one and one-half times the employees’ normal pay rate. Employers can pay overtime at a higher rate or even for 35 hours of work a week. The minimum is 1.5 times regular pay and 40 hours a week.
Some states have established their own overtime laws. Where employees are subject to federal and state overtime laws, the higher standard of overtime pay will apply. Extra pay for working nights and weekends will be subject to employee-employer agreements.
Overtime claims under the FLSA
Employers may face overtime claims under the FLSA if:
- They wrongly treat employees as ‘exempt’ from FLSA’s overtime requirements.
- They do not record or pay for the ‘off the clock’ hours spent by employees on job-related activities. These include all compensable activities performed outside employees’ normal shifts.
- They do not include ‘wage augments’ like shift differential or longevity pay when calculating employees’ overtime rate. Wage augments can be loosely defined as the ‘bonuses’ received in addition to base wages.
A waiver on overtime pay is deemed illegal under labor laws. Neither employer nor employee can waive overtime pay. However, state laws may allow workers to request time off later as an alternative to overtime pay. Known as ‘comp time,’ federal law allows this only for public employers and employees, so most businesses cannot have such agreements.
This content is provided by Patriot Software, Inc., developer of online payroll software, applicant tracking software and other small business software solutions. For more information, visit www.PatriotSoftware.com.