Whether it’s due to a tough economy and a scarcity of jobs, the need for extra money or just the company culture, millions of Americans work overtime. In fact, Americans work on average more official overtime hours than workers in any other industrialized country. In just twenty years Americans have added an hour and a half a week — or over a week of extra work a year.
What many people do not realize is that overtime rules and pay rates are strictly governed by the Department of Labor under the Fair Labor Standards Act. Here are the key provisions and regulations to be aware of when it comes to overtime work:
– The federal overtime provisions are contained in the Fair Labor Standards Act (FLSA), which covers over 130 million workers. Unless exempt, employees covered by the Act must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. Firms with less than $500,000 in annual business are not covered by the act. Your payroll/HR department can tell you if you are an exempt (not eligible for overtime) employee or not.
– No overtime limit: There is no limit in the Act on the number of hours employees aged 16 and older may work in any workweek. The Act does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, unless overtime is worked on such days.
– The Act applies on a workweek basis. An employee’s workweek is a fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods. It need not coincide with the calendar week, but may begin on any day and at any hour of the day. Different workweeks may be established for different employees or groups of employees. Averaging of hours over two or more weeks is not permitted. Normally, overtime pay earned in a particular workweek must be paid on the regular pay day for the pay period in which the wages were earned.
– The Act requires employers of covered employees who are not otherwise exempt to pay these employees a mandated federal or state minimum wage. So overtime wages, paid at time and a half of normal wages, must be greater than the minimum wage.
– Overtime Pay May Not Be Waived: The overtime requirement may not be waived by agreement between the employer and employees. An agreement that only 8 hours a day or only 40 hours a week will be counted as working time also fails the test of FLSA compliance. An announcement by the employer that no overtime work will be permitted, or that overtime work will not be paid for unless authorized in advance, also will not impair the employee’s right to compensation for compensable overtime hours that are worked.
– The Act exempts some employees from its overtime pay and minimum wage provisions, and it also exempts certain employees from the overtime pay provisions only. Because the exemptions are narrowly defined, employers should check the exact terms and conditions for each by contacting their local Wage and Hour Division office (http://www.dol.gov/whd/america2.htm). The following are examples of employees exempt from both the minimum wage and overtime pay requirements:
- Executive, administrative, and professional employees (including teachers and academic administrative personnel in elementary and secondary schools), outside sales employees, and certain skilled computer professionals (as defined in the Department of Labor’s regulations)
- Employees of certain seasonal amusement or recreational establishments
- Casual babysitters and persons employed as companions to the elderly or infirm