Summer is approaching and along with it comes numerous employee vacation requests. This can become problematic for employers, especially those running small businesses who are solely charged with the responsibility of processing payroll. If companies do not have a human resources team or accounting department that is in charge of calculating employee pay, they might want to consider outsourcing human resources.

Outsourcing is a smart choice for many companies that don't have the means to hire an on-site, full-time staff, but want to benefit from the security and professionalism those services offer. However, if small business owners decide to tackle the task on their own, they should familiarize themselves with the Fair Labor Standards Act (FLSA) and its overtime policies.

The FLSA was established by the U.S. Department of Labor to guarantee that all employees receive basic benefits, such as overtime pay for extra hours worked and minimum wage. As a result, most non-exempt (usually hourly) employees should be compensated time-and-a-half for all overtime employee attendance.

Holidays and vacation time, on the other hand, may be compensable (i.e. an employee receives pay), but they should not be counted toward overtime hours. Calculating these hours into an employee's wages can be one small mistake that will add up in the long term.  

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