Fact Sheet #23: Overtime Pay Requirements of the FLSA U S. Department of Labor

Under the FLSA, you must pay non-exempt employees overtime for all overtime hours they’ve worked, even if you didn’t approve the overtime in advance. Calculate your effective hourly rate including overtime potential. Or, if you want to see your overtime rate multiply at maximum speed, use your overtime wages to pay off high-interest debt and then redirect that paid-off debt payment into an investment.

• However, certain categories of employees may be exempt from overtime requirements based on their job duties and salary.
• Next, you must divide the day rate or piece rate earnings by the total number of hours worked (productive and nonproductive) in the week to determine their regular hourly pay rate.
• For example, in California you must pay overtime to non-exempt employees if they work more than 8 hours a day, and beyond 12 hours of overtime they’re entitled to double their hourly rate.
• Speaking of employee pay, organizations use Salary.com’s Compensation Software to easily manage and structure their salary systems.
• Employers are encouraged to consult with legal counsel for advice regarding their organization’s compliance with applicable laws.

Ignoring Multiple Pay Rates or Daily Overtime Laws

• Over 70 million people work hourly, and it’s likely that some of them work extra shifts (and earn overtime pay) from time to time.
• Federal law does not have different overtime rates for night shifts or weekends, although employers can offer higher rates for these hours if they choose to.
• Overtime rates are calculated based on the employee’s regular rate of pay.
• This is not always the same as the employee’s stated hourly wage or salary.
• Multiply the overtime rate by the number of overtime hours worked and add it to the employee’s regular pay to get the total overtime pay.
• Beginning January 1, 2025, the “standard salary level” will rise from the current $684 per week to $1,128 per week, which is equivalent to $58,656 per year for a full-year worker.
• While most salary employees are exempt from overtime pay, you may still need to know how to calculate overtime pay for salary employees.

However, excessive overtime can lead to burnout, health problems, a reduction in employee engagement, poor quality of output, workplace accidents, absenteeism, high employee turnover, and so on. Coverage and Employment Status Advisor – helps identify which workers are employees covered by the FLSA. Speaking of employee pay, organizations use Salary.com’s Compensation Software to easily manage and structure their salary systems. The system offers an easy-to-use interface for regular reviews, enhancing the accuracy of your payroll. This significantly reduces the likelihood of human error in Bookkeeping for Startups timekeeping and streamlines the process of logging hours. The Department of Labor is responsible for enforcing overtime requirements under the FLSA.

Example 3: Salaried Non-Exempt Employee (Fixed 40-Hour Schedule)

Calculating overtime pay for piece-rate employees requires specific considerations due to the nature of their compensation structure. Some unearned revenue states, however, have different regulations and require employers to pay overtime hours based on a daily work time threshold. Whichever law is more favorable to employees is the one you should adhere to in your state. The regular rate on which overtimepay is calculated includes remuneration (or pay) for employment, and certain paymentsmade in the form ofgoods or facilitiescustomarily furnished by the employer.

FLSA Overtime Calculator Advisor

• For the most part, you only have to pay overtime for nonexempt employees, who are typically hourly workers who earn at least the minimum wage.
• They must receive overtime pay for hours worked over 40 in a workweek.
• Its customizable settings allow for specific configurations to meet different legal requirements.
• Employees covered by the FLSA are entitled to at least 1.5 times their “regular rate of pay” for any hours worked over 40 in a week.
• The focus is on the employee’s primary duty, which means the principal, main, major, or most important duty the employee performs.

Whether you’re working extra hours occasionally or logging overtime every week, staying informed about your compensation is critical. The Overtime Calculator empowers you to track your work and pay with confidence, precision, and convenience. Your overtime rate is usually outlined in your employment contract, labor union agreement, or local labor laws. An employee earns a $1,000 weekly how much is overtime salary plus $500 in commissions and works 50 hours. It is critical to understand that all three tests must be met for an EAP exemption to apply. Job titles alone do not determine exempt status; the actual job duties and compensation structure are what matter.

How to calculate overtime pay?

That’s why understanding the ins and outs of time and a half, as well as how to calculate it, is important. �Nonexempt� means that the covered employee is entitled to the law�s minimum wage and/or overtime requirements. FLSA overtime pay is due on the regular pay day for the period in which the overtime was worked.

• The tool’s versatility and accuracy make it valuable for any situation requiring precise overtime calculations and compliance verification.
• Overtime is determined on a weekly basis, with the FLSA defining a workweek as a fixed and recurring period of 168 hours – seven consecutive 24-hour days.
• Overtime can complicate payroll quickly, especially if you’re juggling multiple employee types or varying schedules.
• Beyond calculating overtime pay for your regular hourly employees, there are other cases where you’ll need to calculate and pay overtime.
• These employees are covered by the FLSA’s minimum wage and overtime provisions.
• If no hours were entered in the top section of the calculator the field will return N/A (not applicable).