The Fair Labor Standards Act was enacted in 1938 to protect workers’ rights to a minimum wage and overtime compensation. This law also provided protections for child labor in the U.S. Companies that willfully violate the wage and hour provisions of the FLSA may face criminal prosecution and fines of up to $10,000 per violation. In the fiscal year 2019, the U.S. Department of Labor reports that it completed 9,566 minimum wage violations involving back pay of $39,509,834. The agency also completed 11,018 cases involving $186,258,969 of back pay.
Under the FLSA, non-exempt employees who work for covered employers must be paid overtime compensation at a rate of one-and-one-half times their regular hourly rate for each hour that they work in a workweek over 40. Calculating overtime pay can be tricky. The attorneys at Swartz Swidler can offer you guidance about whether you have received the appropriate amount of overtime compensation from your employer.
What does hours worked include?
Under the FLSA, the hours that are worked by an employee include all of the times during which the employee is required to be on the company’s premises, on duty, or at any other work location. Your hours worked also includes any time that you are allowed to work. This means that if you stay late to complete a task, that time will count towards the total hours that you have worked.
How the workweek is defined
The workweek is defined as a regularly recurring, fixed period of seven consecutive days or 168 hours. It can begin on any day of the week and any hour of the day. The workweek used by your employer does not have to follow the calendar week. Your pay frequency also does not impact the workweek.
After your employer chooses when the workweek begins and ends, the start and stop times will remain the same no matter how many hours you are scheduled. Your employer can change the start and stop times of the workweek at your company only if the changes are permanent and are not simply designed to avoid paying overtime. When overtime pay is calculated, each workweek stands by itself. Your employer cannot average the hours over multiple weeks.
How is the regular pay rate for an employee calculated?
Your employer calculates your regular pay rate by weighting the average of your hourly rate. To calculate your regular rate of pay, you can divide the total payment that you received in a workweek by the total number of hours that you worked. Your total pay includes all of the payments that you have received from your employer. Your compensation can be hourly, by a piece-rate, by commissions, or by salary. Your total pay also includes any nondiscretionary bonuses, promotional bonuses, shift differentials, and cost-of-living adjustments that you are given.
If your company pays you in goods or lodging, your total pay also includes the value of those. For instance, if your wages include lodging or the use of a company-owned vehicle, the fair value of the lodging or vehicle should be added to your earnings before your regular rate of pay is determined.
Statutory exclusions from the regular rate of pay
Your regular rate of pay excludes certain types of payments under the FLSA, including the following:
- Payments made as gifts or rewards that are not dependent on your production, efficiency, or your hours worked
- Payments made for vacation or holiday pay, sick pay, or your employer’s failure to provide work
- Expense reimbursements to employees for work-related purposes
- Overtime premiums or premiums paid to work on holidays or weekends
- Employer-provided benefits
- Situations in which an employee earns multiple rates in one workweek
Some employees might perform work of several types at different rates during one workweek. If you work at two or more rates of pay during a week, you will add up your total earnings from all of the rates during that week and divided it by the total number of hours that you worked.
Earning commissions or bonuses that cover more than one workweek
If you earn a nondiscretionary bonus over more than a single workweek, your employer must allocate it to the weeks in which you earned it. If your employer cannot do that, your employer must use another reasonable method of including it. For example, your employer might allocate equal amounts of the nondiscretionary bonus over all of the weeks that it covers.
Steps involved in calculating overtime pay
To calculate overtime for a workweek, your employer must follow several steps. First, your employer should calculate your regular pay by adding the total pay that you earned with any additional compensation and subtracting the excluded amounts. Next, your employer will calculate your regular rate of pay by dividing your regular pay by the total number of hours that you worked. Then, your employer will calculate the overtime premium by multiplying your regular rate by 0.5. He or she will then subtract 40 from the total hours that you worked and multiply it by 1/2 of your regular rate. Finally, your employer will determine the total amount to pay you for the week by adding your total pay and the overtime premium together.
Calculating overtime pay correctly can be difficult. If you think that your employer made a mistake on your paycheck, you should talk to your supervisor or human resources. If you are not satisfied with the resolution, you might want to consult with the experienced employment lawyers at Swartz Swidler. We can review your paystubs and the calculations to determine whether any errors were made. Contact us today by calling us at 856.685.4720 or by submitting your information to us using our online contact form.