Tips for correctly calculating overtime pay
The Department of Labor's Fair Labor Standards Act (FLSA) guarantees employees receive minimum wage and overtime pay (time-and-a-half) if they work more than 40 hours in a single workweek. This 168-hour period can begin on any day, at any time, as long as it includes seven consecutive days made up of 24-hour periods.
Correctly compensating workers for overtime employee attendance is more complicated than simply multiplying their pay rate by 1.5 for additional work hours. The calculation requires employers be familiar with the FLSA and its definition of what is considered a standard pay rate.
An employee's regular pay rate must include all remuneration they receive for time attendance. This must not be less than minimum wage and employers cannot average hours worked on multiple days or across weeks in a single pay period to avoid overtime pay.
For example, if an employee works 60 hours one week and 20 the next during the same pay period, the FLSA does not allow businesses to combine them for 80 hours total. The worker must be paid for 40 hours of work at regular pay rates and 20 hours of overtime.
If employers are not familiar with FLSA provisions and what is required for accurate payroll processing, they could consider outsourcing human resources to an agency that's more familiar with labor laws, or invest in an advanced timekeeping system that can accurately calculate various pay rates.
Correctly compensating workers for overtime employee attendance is more complicated than simply multiplying their pay rate by 1.5 for additional work hours. The calculation requires employers be familiar with the FLSA and its definition of what is considered a standard pay rate.
An employee's regular pay rate must include all remuneration they receive for time attendance. This must not be less than minimum wage and employers cannot average hours worked on multiple days or across weeks in a single pay period to avoid overtime pay.
For example, if an employee works 60 hours one week and 20 the next during the same pay period, the FLSA does not allow businesses to combine them for 80 hours total. The worker must be paid for 40 hours of work at regular pay rates and 20 hours of overtime.
If employers are not familiar with FLSA provisions and what is required for accurate payroll processing, they could consider outsourcing human resources to an agency that's more familiar with labor laws, or invest in an advanced timekeeping system that can accurately calculate various pay rates.
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