Overtime Wages: Get It Right the First Time!

The Fair Labor Standards Act (FLSA) is the law that establishes the rules for overtime pay to employees. Employers should take special measures to ensure that they are in compliance with the FLSA’s stipulations on how to calculate overtime and how much to pay. Rules stipulated by the FLSA cannot be waived, even if the employer and employee both agree to waive it.

The FLSA requires overtime to be paid to any employee who works over 40 hours in any consecutive seven-day period. The employer may decide which seven day period to use (for example: Monday through Sunday or Sunday through Saturday), but the employer must be consistent with the seven-day period they choose to use. Any time an employee works over 40 hours during a seven-day period they are entitles to overtime, even if it is merely minutes over the 40 hours. The hourly rate for overtime wages is calculated at one and a half times the employee’s normal hourly rate. So, if an employee typically makes ten dollars an hour, they will make fifteen dollars an hour for their overtime hours. Because overtime pay is calculated using a seven-day basis, it is best practice to pay employees every two weeks rather than twice a month. This will make bookkeeping easier and help ensure that the employer’s organization is in full compliance with the FLSA.

Failure to comply with the FLSA can have severe consequences for employers. Employees who have not been paid overtime as required by the FLSA can be awarded back pay for their unpaid overtime, often with interest. In addition, there can be additional damages owed to the employee in the form of liquidated damages, which typically doubles the amount owed by the company to the employee.

If you have any questions about your business’s compliance with the overtime rules of the FLSA please contact Employer-Lawyer at (801) 874-4964.