Most employers are required to pay overtime to at least some of their employees. Not all employees can earn overtime, however. Whether your employee is entitled to overtime pay depends on your state’s law, their job duties, and how many hours they work.
Federal Fair Labor Standards Act
Although most employers have to pay overtime, not all do. The Federal Fair Labor Standards Act (FLSA) dictates if a business falls under the federal wage and hour law that sets out the overtime rules. Generally, a business is covered by the FLSA if it has $500,000 or more in annual sales.
Even if a business is smaller, however, it is still covered by the FLSA if it is engaged in interstate commerce. Business between states or interstate commerce is defined as making phone calls to or from another state, sending mail out of state, or handling goods that have come from, or will go to, another state. If your business is so small or local that it isn’t covered by the it still might be covered required to pay overtime by your state’s overtime law.
Exempt employees
If a business is covered by the FLSA, it must pay overtime to all eligible employees unless they fit into an exception to the law. A few examples of exempt employees are:
• salary basis executive, administrative, and professional
• independent contractors
• volunteers
• outside salespeople
• certain computer specialists (such as systems analysts, programmers, and software engineers) who earn at least $27.63 per hour
Administrative, Executive, and Professional Employees
Employees whom the law defines as “administrative, executive, or professional” may be exempt from being paid overtime. For an employee to qualify for this exemption category they must be paid on a salary and must spend most of their time performing job duties that require the use of discretion and independent judgment. Salary employees that earn at least $455 per week and receive the same salary every week, regardless of how many hours work or the quantity or quality of the work they do. Here are the basic requirements for the administrative, executive, and professional exemptions.
• An executive employee’s primary duty must be managing a recognized division or department of that enterprise. The employee must regularly supervise two full-time employees and must have the authority to hire and fire.
• A professional employee’s primary duty must either be performing work that requires advanced knowledge in the field of science or learning, of a type that is usually attained through an advanced course of study; or performing work that requires invention, imagination, originality, or talent in a recognized creative or artistic field.
When do employees receive overtime?
Under the FLSA, if an employee has worked overtime if they work more than 40 hours in a week. Some states calculate overtime differently, however. For example, California and a few other states have a daily overtime standard for overtime once an employee has worked eight hours in a day, even if they don’t work more than 40 hours in a week. The overtime premium is calculated to be paid time and a half: 150% of their regular rate of pay. Such as, wages, commissions, performance-based bonuses and prizes, and shift differentials.
Payroll Data Processing keeps your business up-to-date on the ever-changing labor laws. This helps you stay focused on building your business instead of managing administrative duties. Eliminate entry mistakes by integrating our timekeeping system or yours into our payroll. Receive reliable answers to your HR questions to protect your business from costly lawsuits and audits. Contact us at 1-888-897-1188 or email us at sales@payrolldataprocessing.com.
