For many industries, 'tis the season to discuss overtime in the run up to Christmas. It is important for any company with employees to understand its responsibilities for paying overtime. This includes knowing who is and who is not eligible for overtime pay, and what eligible employees are entitled to receive.
Here’s a brief overview of what you need to know.
Eligibility
There are two categories of workers for under the Fair Labor Standards Act (FLSA): exempt and nonexempt. Exempt employees are not eligible for overtime pay, and are generally salaried workers, or workers in management or “professional” positions.
Nonexempt employees are the employees who are eligible for overtime. This encompasses most types of hourly workers. Hourly workers who work more than 40 hours in a single work week (and more than eight hours in a day in some states, including California) are eligible to receive overtime pay at a rate of 1.5 times their normal wages (frequently referred to as “time and a half”). The definition of a workweek can be defined by the employer as any set of seven consecutive days, and each day is a 24-hour time period. For most businesses this would be a calendar week, but some businesses may choose to operate a pay period of, say, Wednesday to Tuesday.
Independent contractors are not eligible for overtime pay, because they are technically not employees and therefore do not have the same rights and protections afforded to employees under federal legislation such as the FLSA.
Employees are not allowed to waive their right to overtime pay, no matter the circumstances.
There are some exceptions to the above-listed overtime rules. There are some circumstances in which police, firefighters and certain medical employees are not eligible for overtime, for example, but it is still important to check on the possibility of such exceptions with the Department of Labor.
Double time pay
Employers are under no obligation to offer more than time and a half payment for overtime workers in most cases, but may choose to do so if they wish. However, in California, there are rules requiring employers to pay double time for all hours worked over 12 in any single work day, as well as all hours worked over eight on a seventh consecutive day of work. This is beyond the normal time and a half payment that would be paid for all hours from eight to 12 in normal circumstances.
It is in your best interest as an employer to regularly refresh your memory on the rules enforced by the Department of Labor with regard to wage and hour issues such as overtime eligibility and payment. For more information about what you should know about paying your employees their overtime wages, contact us today at Creative Agency Success.
