Overtime Compensation
Overtime Compensation Under The Fair Labor Standards Act
The Fair Labor Standards Act (FLSA) is an extremely complex statute which has resulted in a vast amount of case law and regulations. This is a simplified overview of the overtime provisions of the FLSA.
Generally, overtime pursuant to the FLSA requires one and one-half times the regular rate of pay for hours worked over 40 hours a week. Overtime must be paid on the regular payday. The employment of an individual in any work subject to the FLSA, in any single workweek, brings the overtime provisions into play. The employee cannot work in excess of the maximum hours without receiving the required overtime pay.
A common misconception by employers is that overtime is only due to the employees who are paid on an hourly basis. However, overtime is due to all nonexempt employees whether they are paid on a daily, hourly, salary, piece rate or commission. The method of pay can affect how the overtime is calculated. Each workweek is considered separately for overtime purposes. Hours cannot be averaged over two or more weeks. When a worker is paid an hourly rate with no bonus or other compensation, their hourly rate is the regular rate of pay. To compute overtime, their pay is converted to an hourly rate and then paid at one and one-half times the regular rate for all hours worked over 40.
A workweek consists of seven consecutive 24-hour periods, which totals 168 hours. These seven days need not coincide with the calendar week, but may begin on any day and any time of day. The beginning of the workweek may be changed if it is intended to be permanent and is not to evade the overtime requirements. The workweek includes the time the employee is required to be on the employer's premises on duty or at a prescribed workplace.
Other than the child labor provisions, the FLSA does not set a maximum number of hours that an employee may work in a week. The employee may work a multitude of hours if the required overtime compensation is paid for hours worked in excess of the maximum.
There are many exemptions from the overtime provisions of the FLSA. For example, executive and professional employees are exempt, as are computer programmers, analysts and outside salespeople.
SOURCE: Joe Bilotta, Esquire, Vasallo & Bilotta
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