Failure to properly compensate employees for working overtime is a common cause of lawsuits and department of labor (DOL) investigations. Businesses that do not pay or improperly calculate overtime wages may end up owing back pay, fines, and other damages. In many cases, employers have been ordered to pay employees’ legal fees for these lawsuits as well. You don’t want to make this costly mistake, so keep reading to learn how to calculate overtime.
To understand how and when to calculate overtime, it’s important to understand the federal law that regulates overtime pay requirements. The Fair Labor Standards Act (FLSA) provides provisions around overtime compensation as well as a number of other compensation and labor issues.
The FLSA also provides guidelines on employment classifications and which employees must be paid for working overtime. Nonexempt employees are those that are not exempt from overtime laws. Under the FLSA, non-exempt employees must receive overtime pay at a rate not less than one and one-half times the regular rate of pay for any time worked beyond 40 hours in a workweek.
As such, overtime is generally required whenever a non-exempt employee works over 40 hours within one workweek. Per the Department of Labor, a workweek is defined as a fixed and regularly recurring period of 168 hours (seven consecutive 24-hour periods). It need not coincide with the calendar week and may begin on any day and at any hour of the day. However,...
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