|
HR MATTERS E-TIPS
THIS WEEK'S E-TIP: Holiday Pay, Bonuses, and Overtime
Published by Personnel Policy Service, Inc.
"Your Policy and Compliance Experts Since 1972"
| |
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
THIS WEEK'S E-TIP: Holiday Pay, Bonuses, and Overtime
'Tis the season for paid holidays, bonuses, and, of course, calculating
overtime. Find out what you have to include in nonexempt employee
pay. |
|
|
|
^^^^^^^^^^^^^^^^^^^^^^^^^^^
Featured
Product ^^^^^^^^^^^^^^^^^^^^^^^^^^^^ |
|
|
 That they're a ticking time bomb? That a lawsuit is in your future
because
your policies have not kept up with the times?
You can STOP worrying.
Our easy-to-use, all-in-one service gives you what you need for HR
policy and compliance "peace of mind".
It's time to budget for the Personnel Policy Manual. You'll be glad
you did
– we guarantee it.
See first-hand how the Personnel Policy Manual service will quickly
become your most important business partner. Request a 30-day
risk-free trial subscription.
Click here for
details or go to:
http://www.ppspublishers.com/service1.htm |
|
|
|
|
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
= = = = = = = |
|
|
THIS WEEK'S E-TIP: Holiday Pay, Bonuses, and Overtime
For many employers, the month of December is punctuated with
vacations, paid holidays, and the payment of end-of-the year
bonuses.
As a result, calculating overtime can be a bit more complicated at
this
time of year than just paying a normal premium to nonexempt
employees
for all hours worked over 40 in a week. ("Nonexempt" refers to all
employees covered by the minimum wage and overtime requirements of
the Fair Labor Standards Act (FLSA), i.e., those who are not exempt
from it.)
To compute overtime payments properly, you have to consider certain
premium pay and whether the employee actually worked 40 hours in any
given week. Find out below how bonuses and paid time off affect
overtime calculations.
* Holidays and Other Paid Days Off *
According to the FLSA, nonexempt employees must be paid overtime at
time and one-half their regular rate of pay 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 any paid time off
in
the overtime calculation, if the employee did not perform any work
during
that period.
So, if a nonexempt employee works a full 40-hour workweek and also
takes a day of paid holiday, vacation, or sick leave, the employee
is
entitled to overtime pay only if he actually works more than 40
hours in
the workweek. (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.)
Consider the following example. A nonexempt employee normally works
Monday through Friday, eight hours a day. She receives a paid
holiday
for the Monday after Christmas (the day most employers are providing
a
paid holiday) and does not work on that day. The employee does work
the other four days of the week, 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
holiday).
Since she actually worked only 40 hours, she would not have to
receive
premium pay for the additional hours.
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,
the
FLSA regulations generally allow you to credit this extra
compensation
towards any overtime actually earned in the same week. |
|
|
|
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ |
|
|
* Bonuses and Incentives Pay *
The answer to whether bonuses and incentives must be included in
overtime pay depends on the underlying reasons for the extra pay.
Bonuses and incentives that are dependent on hours worked,
productivity, or efficiency must be included in determining an
employee's
"regular rate" of pay.
For example, an hourly employee who earns $7 per hour in a 40-hour
workweek has a "regular rate" of pay of $7 per hour and an overtime
rate
of $10.50 ($7.00 x 1.5). If that same employee received a $50
production bonus for that week, the employee's regular rate of pay
would
change to $8.25 per hour ($50 plus the regular weekly rate of $280,
divided by 40 hours) and the overtime rate becomes $12.38 per hour
for
that week ($8.25 x 1.5).
Under some bonus plans, the bonus is not paid weekly. In that case,
you may disregard the bonus until the time when the bonus is
actually
determined and, in the meantime, may pay compensation for overtime
at
one and one-half times the employee's base hourly rate, exclusive of
the
bonus. When the amount of the bonus is properly calculated, it must
be
allocated over the period it covers, and a revised overtime rate
then must
be applied to any hours in excess of 40 that were worked during that
period. The employee should receive additional compensation for each
workweek including overtime during the period. The amount will be
calculated based on the new overtime premium using the bonus, less
the
overtime premium previously paid.
Other examples of bonuses or incentives that must be included in an
employee's regular rate of pay are: nondiscretionary bonuses paid
according to a contract; efficiency bonuses for completing work in
less
than the allotted time; attendance bonuses; and bonuses paid to
employees to work in undesirable locations.
Bonuses that do * not * have to be included in the regular rate of
pay are
those received on special occasions (such as Christmas) as a reward
for
service and which are not measured by, or dependent on, hours
worked,
productivity, or efficiency. In addition, premium pay for working on
holidays, Saturdays, or Sundays does not have to be included in
overtime calculations, if the amount is at least one and one-half
times the
employee's regular rate of pay.
* Don't Be a Christmas Grinch (or a Defendant) *
The end of the year, traditionally a time for holiday cheer and
goodwill,
also can be a time for confusion and mistakes, especially if you're
in
charge of payroll and overtime calculations.
The issue of the proper payment of overtime is probably one of the
most
contested areas under the FLSA, and you may have more legal
exposure than you realize. The Department of Labor has been
aggressively pursuing wage and hour claims, as have plaintiff's
attorneys. These actions have resulted in large dollar judgments
when
nonexempt employees were not paid properly for all their overtime.
So, make sure you understand what your overtime obligations are when
paying for holidays and bonuses. You don't want to be the Grinch who
ruins the holidays, either for your employees or your organization,
by not
handling overtime correctly. |
|
|
|
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
= = = = = = = |
Subscribers to the Personnel
Policy Manual and HR Policy
Answers on
CD can find more information on holiday pay and overtime in
Holidays,
Chapter 503, note 13, and more information on bonuses and overtime
in
Salary Administration, Chapter 301, note 11.
If you don't have the
manual, but would like to order a trial
review, go to:
http://www.ppspublishers.com/service1.htm
Or if you would like to buy the above
individual policies only, go to:
Holidays policy:
http://www.hrpolicyanswers.com/xstore/catalog/
Salary Administration:
http://www.hrpolicyanswers.com/xstore/catalog/
Or if you would like to buy the above individual policies
Or just give us a call toll-free at 1-800-437-3735. |
|
|
|
^^^^^^^^^^^^^^^^^^^^^^^^^^
HR Compliance
Resources ^^^^^^^^^^^^^^^^^^^^^^^^^^^ |
|
|
|
HR professionals have relied on Personnel Policy Service policy and
compliance products since 1972. If you're looking for practical
solutions to employment-related problems, we can help.
Click below for information (and risk-free offers) or call
800-437-3735.
HR
Policy Answers on CD - searchable database of policies,
legal
references, best practices, newsletters
Trial Offer:
http://www.ppspublishers.com/answersoncd.htm
Personnel Policy Manual - policies, legal references, best
practices
Trial Offer:
http://www.ppspublishers.com/policymanual.htm
HR Matters Newsletter - HR trends, policy analysis, Q&A
Trial Offer:
http://www.instanthrpolicies.com/hr-matters/hrme.htm
Instant HR Policies - customize and update employee
handbooks
using professionally written personnel policies
http://www.instanthrpolicies.com
Download HR Policies - Do
you manage key employee Issues?
Were You looking for a
specific topic or did you have an idea in mind? Use our topic list
below to
easily locate the right HR policy product.
http://www.hrpolicyanswers.com/xstore/catalog/policieslist.html |
|
|
|
|
|
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ |
YOU CAN TRUST PPS
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.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Interested in using an article from HR Matters E-Tips on your Web site or
in a newsletter?
Please contact Robin Thomas, Managing Editor of Personnel Policy
Service, Inc., to request permission. You can contact her by email at
editor@ppspublishers.com or by
telephone at 1-800-437-3735.
Please note that the information in every issue of HR Matters E-Tips is
the original, copyrighted work of Personnel Policy Service, Inc., and is
protected under U.S. copyright laws. As such, you may not reprint or
publish in any format any article or portion of article from HR Matters E-
Tips without the express permission of Personnel Policy Service, Inc.
Remember, too, we encourage you to pass along any issue of the E-Tips
by forwarding it to friends and colleagues.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
A note to advertisers:
Do you want to reach the human resources market?
Your message can be seen by over 55,000 HR professionals when you
sponsor an issue of HR Matters E-Tips.
Contact Elise Whitman at
ezine@ppspublishers.com
or call toll-free 1-800-437-3735.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
HR Matters E-Tips is a f-r-e-e service of Personnel Policy Service, Inc.
To subscribe, go to:
http://www.ppspublishers.com/ezsignup.htm
Personnel Policy Service, Inc. All Rights Reserved.
HR Matters is a registered trademark of:
Personnel Policy Service, Inc.
159 St. Matthews Ave., Suite 5, Louisville, KY 40207
Tel: 1-800-437-3735 - Fax: 1-800-755-7011
www.ppspublishers.com -
www.instanthrpolicies.com
-
www.hrpolicyanswers.com
CONTACT US: ezine@ppspublishers.com
FORWARD THIS ISSUE: We invite you to forward HR Matters E-Tips to
a colleague or friend.
|
Personnel
Policy Service, Inc.
Human Resources
Policies, Company Manuals, Newsletters, HR Policies, Training, & Articles
