518-373-4111
As you may know, the federal overtime provisions contained in the Fair Labor Standards Act (FLSA) require that non-exempt employees covered by the Act must receive overtime pay for hours worked over 40 in a week at a rate of at least time and one-half their regular rates of pay. One aspect of this that employers must ensure they do not overlook is how they are calculating overtime. Make sure you calculate overtime per workweek, not per pay period.
The workweek is the 7-day, 168-hour period during which you track employee time to see if anyone has worked more than 40 hours and is therefore entitled to overtime. For instance, many companies set their workweek to begin at 12:00 am Sunday morning and end the following Saturday at midnight. Your workweek shouldn’t fluctuate, and your employees should be aware of when it starts and ends (hopefully, that’s in your employee handbook).
A common error is that employers on a 2-week payroll cycle think that they don’t have to pay overtime if the employee didn’t work more than 80 hours in the pay period. That’s not the case. If an employee worked 50 hours in week 1, and 30 hours in week 2, they’d be entitled to 70 hours of straight time and 10 hours of overtime during that pay period. In week 1 they did 10 hours of work above and beyond 40 in the workweek and are therefore entitled to overtime, regardless of how many hours they worked during the rest of the pay period.
Need help calculating overtime? Use our handy Business Tax Calculator as a guide, and contact us at (518) 373-4111 for more information.
