Paying Overtime: No Buts About it
If your employees are willing to go the extra mile, you’ll want to make sure they are rewarded accordingly. Doing so could mean dishing out individual or group recognition, special bonuses, or other creative on–the–job perks.
That said, if going the extra mile means your team is working overtime, creativity may not be an option. If you have employees who are overtime eligible, you’ll have to play by the rules.
If your overtime-eligible employees are putting in more than forty hours in any given work week, whether it’s mandatory, approved, or unapproved, they must be paid overtime.
The following are NOT solutions to paying overtime:
Adjusting hours or pay periods
An overtime eligible employee who works 60 hours one week and 20 hours the next is still entitled to overtime for those 20 hours worked in week one. This is true even if all of this occurred in a single pay period. Hours worked per week are hours worked per week. Period.
Work weeks can begin on any day and at any time and may be different for various employees and work groups, but the work week must be a set standard. Employers cannot shift work week start days or times to avoid paying overtime and hours cannot be averaged over multiple weeks or pay periods.
Withholding pay for any reason
Overtime pay earned in a particular week should be paid on the regular pay day for that specific pay period. It cannot be withheld as an incentive, until it reaches a certain number of hours, in retaliation, or for any other reason.
Paying the wrong rate
One common wage and hour violation is when employers attempt to pay overtime hours at an employee’s regular rate of pay. This is an incorrect payout. While the first 40 hours of the week are paid at the regular rate, all additional hours worked in that same week must be paid at 1.5 times that rate.
Mixing up employee classifications
Some employers misclassify employees to avoid paying overtime, but this can be a very expensive long–term strategy. Intentional misclassification of employees can result in time consuming audits and expensive fees and fines. Class action lawsuits can lead to exorbitant legal costs and settlements, negative PR, poor morale, and a damaged reputation.
Replacing it with comp time
In one study, one-third of 500 private-sector employers said they used comp time instead of overtime — a common violation of the FLSA. Private sector non-exempt employees covered by the FLSA must be paid for all overtime hours worked and are not eligible for comp time. Even if both the employer and the employee would prefer a comp time system, it’s rarely legal. The FLSA still mandates that nonexempt employees be paid overtime instead of granted comp time.
But we didn’t mean to…
Sometimes employees aren’t out to get anyone. They just don’t understand the complicated rules and regulations and how to apply them.
- Supervisors may think all exempt or salaried employees are exempt from overtime.
- Employers may not understand how to properly classify their positions.
- Employees may be classified incorrectly and not even know it themselves.
- Companies may have a comp time policy that is in violation of FSLA.
Meanwhile, overtime can seem like a squishy concept in the following circumstances:
- When employees want to work extra hours and insist they don’t need to be paid for it.
- If technology allows workers to be available 24/7 and they are taking advantage of it.
- When employees are voluntarily working extra hours and not tracking or reporting it.
- If employers instruct employees not to work overtime, but they are doing it anyway.
- When businesses are using a comp time system that is in violation of the FLSA.
In reality, overtime rules are not squishy at all. They cannot be bent, circumvented, or ignored. The FLSA requires that all overtime eligible employees be compensated for overtime if and when they work it, no matter what the circumstances surrounding it may be. Not buts about it.
It’s important to note that overtime laws and requirements can vary by state, and that they may provide greater protection for employees than what is given under the FLSA. Where federal, state, and local laws are in conflict, the law that is most beneficial to the employee should be upheld. This is why it’s critical to stay on top of your local regulations or work with an expert who knows the laws inside and out.
Making sure your company is playing by the right overtime rules will decrease your business risk and your HR headaches. And that’s a winning strategy.
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Photo by Roman Samborskyi