.png)
What Constitutes Overtime in the US?
To put it plainly, all work hours that surpass the minimum of 40 work hours per week are considered overtime hours. In order to achieve complete work hour accuracy and legal compliance, companies determine overtime hours with the following stipulations.
- The working week must include seven successive 24-hour periods and mustn’t exceed this number.
- The working week does not have to follow a specific calendar week, i.e., it can last from Wednesday to Wednesday, for example.
- The 24-hour period can start at any time during the day.
What Cannot Be Considered Overtime?
Employees are not eligible for overtime by default when working on:
- National holidays
- Weekends (Sunday and Saturday)
- Additional rest days such as for religious purposes or vacation.
They only get paid overtime if they exceed their minimum 40-hour work week when working on these days, but if they don’t, they are paid their regular hourly rate. Some companies might offer bonuses to employees who work on holidays or weekends, but that doesn’t fall into the category of overtime.
How Is Overtime Regulated?
According to the FLSA, overtime hours are accrued the minute non-exempt employees cross the 40 work hours per week threshold. Non-exempt employees are employees that work on an hourly salary compared to exempt employees who work for an annual salary and aren’t eligible for overtime hours.
To illustrate, if an employee works 9 hours per day five days a week, they accrue 5 overtime hours aside from their regular 40 hours.
However, according to the FLSA, employees who have worked for more than 8 hours in a single workday are not necessarily eligible for overtime if they haven’t crossed the weekly threshold of 40 work hours.
For example, if an employee has worked 10 hours per day for four days during a particular week, then they don’t accrue any overtime hours for that week.
Overtime laws are under federal jurisdiction, but some states have local laws that regulate this on a more granular level. For example, Nevada and Alaska require employers to pay overtime hours to employees who work more than 8 hours for a 24-hour period regardless of the 40-hour workweek.
The federal standard for overtime remains 40 hours for the 7 consecutive 24-hour periods or a full week. All accrued overtime pay for a workweek is paid to employees on their regular payday together with their regular pay.
How Is Overtime Calculated?
As per the FLSA, employers pay overtime compensation to employees at a time and a half rate (1.5x) to their regular hourly pay rate. This rate is the minimum legal rate at which employers need to compensate their employees. However, there is no maximum rate, so companies are free to offer overtime rates that are double the regular rate or higher.
Overtime is calculated by multiplying the employee hourly rate by 1.5 and then multiplying the result with the total number of overtime hours for that week. We’ll use an example.
- Regular pay = $20 per hour x 40 hours = $800
- Overtime pay = $20 per hour x 1.5 x 10 hours = $300
- Total pay = $800 + $300 = $1100
Are There Penalties for Not Paying Overtime?
The FLSA takes overtime rules and regulations very seriously and companies that aren’t in compliance are vulnerable to potential lawsuits from former and present employees and can be subjected to investigation by the Department of Labor.
Companies that are in violation of overtime laws and regulations are investigated by the Department of Labor, more specifically, by the Wage and Hour Division (WHD). First-time overtime offenders found guilty are required to pay any back wages they owe to their employees, and receive a formal recommendation from WHD inspectors on how to implement company-wide changes to avoid repeating such violations. The inspectors also write up a fine or a liquidated damages penalty to the company that equals the back wages the company owes its employees.
Overtime law violations for recurring offenders or violations that appear to be committed on purpose, i.e., by consciously withholding overtime wages from employees, incur fines up to and exceeding $10,000. Business owners who are recurrent offenders are also under threat of imprisonment.
Are Salaried Employees Eligible for Overtime?
There are a few conditions that salaried employees need to meet to be eligible for overtime hours.
Overtime-exempt employees are employees who earn more than $46,476 annually and aren’t eligible for overtime.
Salaried employees who are non-exempt from overtime are eligible for it if they make less than this figure annually, are paid at set intervals (monthly), and perform white-collar activities and tasks that consist of administrative tasks and other professional duties.
When Was Overtime Established?
Overtime has been a part of the American work culture ever since the Fair Labor Standards Act (FSLA) was passed in 1938. Back then, the FLSA stated that overtime hours couldn’t be calculated before an employee has worked 44 hours during a workweek, but was amended to 40 hours per week two years later, in 1940.
