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HR MATTERS E-TIPS
THIS WEEK'S TIP: Overtime Issues under the FLSA (Part 2 of 2)
Published by Personnel Policy Service, Inc.
"Your Policy and Compliance Experts Since 1972"
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THIS WEEK'S TIP: Overtime Issues under the FLSA (Part 2 of 2)
Do you know how vacation and shift differentials affect overtime pay, or
if
you can pay "comp time-off?" Find out the answers to these and other
tricky overtime questions. |
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Easy-to-Read Report *Simplifies* Overtime Changes
FLSA Exemption Regulations: Understanding the Issues
To order, go to:
http://www.hrpolicyanswers.com
Overtime Rule Changes became effective August 23, 2004. Find out how the
revised regulations affect your overtime obligations.
* Read your editors' overview and conclusions
* Learn all of the changes to the FLSA exemptions
* Find out when you can make deductions
* Understand what you can do for partial day absences
* Discover what "safe harbor" defenses exist for inadvertent violations
Order and download our "FLSA Exemption Regulations" report today.
Go to:
http://www.hrpolicyanswers.com/
Or call Personnel Policy Service at 1-800-437-3735. |
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THIS WEEK'S TIP: Overtime Issues
under the FLSA (Part 2 of 2)
In last week's issue, you learned how "regular rate of pay" is defined,
whether you can average hours, how to pay salaried nonexempt
employees, how to calculate overtime for two jobs, and how bonuses
affect overtime pay calculation. (If
you missed that issue, click here:
http://www.ppspublishers.com/ez/html/011105txtb.html.
This week, you'll get the answers to five more overtime questions,
including whether you can pay comp time-off instead of overtime, how
vacation time and shift differentials affect overtime pay, whether
employees can forgo overtime pay, and what state laws regulate
overtime.
1. How do shift differentials affect overtime pay?
Extra pay for shift differentials and "dirty work" generally must be
considered in calculating the employee's regular rate. (Shift
differentials
and "dirty work" pay are extra compensation provided for employees who
regularly work unpopular shifts or less desirable jobs.) However, when
the differential is at least one and one-half the employee's regular
rate
and is paid under a collective bargaining agreement that establishes
certain hours as the regular work day, it may be excluded from the
regular rate and also credited against the employer's overtime pay
obligation.
2. Is a nonexempt employee entitled to overtime pay if the employee
works a full 40-hour week and also takes a day of paid holiday,
vacation,
or sick leave?
Not unless the employee * actually * works more than 40 hours in the
workweek. According to the FLSA, nonexempt employees must be paid
overtime for all hours actually worked over 40 in a single workweek.
Thus, in calculating actual working hours for a nonexempt employee, you
do not have to count the paid time off in the overtime calculation if
the
employee did not perform any work during that period. (Note, however,
that a limited number of states, such as Rhode Island, require payment
of at least time and one-half for employees who work on certain
holidays.)
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Consider the following example. A nonexempt employee normally works
Monday through Friday, eight hours a day. She receives a paid holiday
and does not work on Monday. The employee then works Tuesday
through Friday, eight hours a day, and is asked to work eight additional
hours on Saturday. The employee's pay would be for a total of 48
straight-time hours (40 hours worked and 8 hours paid holiday). Since
she actually worked only 40 hours, she would not receive any overtime
pay.
As an aside, if you voluntarily pay a premium of time and one-half (the
equivalent of overtime) for work on a holiday, weekend, or evening, you
should be able to credit this extra compensation towards any overtime
actually earned in the same week. |
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3. Can you give nonexempt employees compensatory (comp) time-off
in
lieu of paying them overtime?
Private employers may not give comp time-off in lieu of overtime.
However, state and local governments can give nonexempt employees
comp time-off at the rate of one and one-half hours for each hour of
overtime worked, with certain defined limits.
4. Can employees volunteer to work overtime hours at
straight-time pay?
No. It may seem like a "win-win" situation – your nonexempt
employees
would get extra pay for working additional hours, and you would get
extra
work without having to pay overtime rates. However, the FLSA
specifically requires employers to pay nonexempt employees who work
more than 40 hours in a single workweek at least one and one-half
times
their regular rate of pay for each hour worked over 40.
In interpreting the FLSA's requirements, the Supreme Court long ago
(in
Brooklyn Savings Bank v. O'Neil, 324 U.S. 697 (1945)) determined
that
employees cannot waive their rights to overtime compensation, and
the
signing of such an agreement does not have any force or effect.
Therefore, you cannot pressure or allow your nonexempt employees to
work any hours over 40 in a single workweek without paying them the
overtime rate.
5. Do state laws have different overtime requirements?
Many states also regulate the payment of overtime to employees. Most
states simply mirror the FLSA's requirements. For example, Illinois
requires employers to pay nonexempt employees overtime at a rate of
one and one-half times the regular rate for all hours worked in
excess of
40 in a single workweek.
A few states, however, have more restrictive overtime requirements
and
require employers to pay overtime on a daily basis. For example, in
addition to weekly overtime, California requires employers to pay
daily
overtime at the rate of one and one-half the regular rate of pay for
all
hours worked over eight in a single day and at double the regular
rate of
pay for all hours over 12 in a single day. California also requires
that
time and one-half be paid for the first eight hours worked on the
seventh
consecutive day of work, as well as double time for all hours over
eight
worked on that day.
And, at least one state limits the number of overtime hours
employees
may work. In Maine, employers may not require employees to work
more than 80 hours of overtime in a two-week period, except for
certain
"essential services" employees.
* Take Overtime Issues Seriously *
The issue of the proper payment of overtime is probably one of the
most
contested areas under the FLSA, and many employers have more legal
exposure than they realize. The DOL aggressively pursues wage and
hour claims, and it collected over $165 million in back wages in
fiscal
year (FY) 2004, up 48% from just three years ago. In addition,
recent
court decisions have resulted in large adverse dollar judgments when
nonexempt employees were not paid properly for all their overtime.
Given the successes of the DOL and plaintiffs' attorneys in pursuing
wage and hour cases, you cannot afford to be complacent. So, take
care and do not let one of the oldest employment laws on the books
(circa 1938) sneak up on you. |
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Subscribers to the
Personnel Policy
Manual and
HR Policy Answers
on
CD can find more information on :
*
Terminations in Termination of Employment, Chapter 211
*
Overtime and exemptions in Hours of Work, Chapter 207
*
FMLA in Leaves of Absence, Chapter 703
Not a subscriber? If you would like to order any of these policy
chapters,
you can go to
http://www.hrpolicyanswers.com/xstore/ |
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Information provided in HR Matters E-Tips is researched and reviewed
by the HR experts at Personnel Policy Service as well as employment
law attorneys. However, it is not intended as legal advice. Readers are
encouraged to seek appropriate legal or other professional advice.
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