Do you know how vacation and shift differentials affect overtime pay, or if you can pay "comp time-off?"
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. --------------------------------------------------------------------------------------------------------
In this article, 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.)
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.
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.
In this article, 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.)
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.
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.
Labels: compliance hr policies, flsa, nonexempt, overtime, vacation policies
posted by e-Learning Place at 1:38 PM
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