Under the Fair Labor Standards Act, most non-exempt employees must be paid overtime pay for all of the hours that they work above 40 during a workweek. Employees who are covered by the FLSA must receive overtime compensation of at least one-and-one-half their regular hourly rates. The FLSA does not limit the number of hours that employees over the age of 16 can work during a week. It also does not require employers to pay overtime premiums to workers who work on weekends or holidays unless the time worked is overtime. The attorneys at Swartz Swidler can help you to understand the overtime rule and whether your employer has paid you what you are owed.
How the overtime rule works
Under the overtime rule, the requirements are applied based on a workweek. Your workweek is defined as a regularly recurring period of seven consecutive 24-hour days or 168 hours. The workweek does not have to be the calendar week and can start on any day. Different employees may have different workweeks. However, employers cannot average an employee’s hours over two or more weeks when determining whether overtime compensation is owed. Overtime pay that is earned during the workweek must be paid on the next regular pay date for the pay period.
The rule determines whether employees are exempt or non-exempt. Because of the rate of pay and type of work performed by exempt employees, they are not eligible for overtime pay for the hours that they work in a workweek over 40.
Salary for exempt employees
Exempt employees must be paid a salary that remains the same regardless of the number of hours worked in a week. To be considered exempt, an employee must have an administrative, professional, or executive job or be engaged in outside sales or hold jobs as certain types of computer professionals. On Sept. 24, 2019, the U.S. Department of Labor issued a final rule that increased the required minimum salary for an employee to be considered to be an exempt white-collar worker to $684 per week. Previously, the minimum required salary had been $455 per week. This final rule was effective on Jan. 1, 2020, and it extended overtime protection to over one million workers.
Employees who are not exempt who are covered by the FLSA must be paid an overtime premium for all of the hours that they work in a workweek above 40. A worker who earns a salary that exceeds the threshold is not automatically considered to be an exempt employee. Instead, the worker’s job duties must primarily involve administrative, executive, or professional duties as outlined in the regulations.
Workers who make less than $35,568 per year must be paid overtime even if they have professional or supervisory job titles. If they are nondiscretionary, employers may include incentive payments bonuses that are paid annually or more frequently to satisfy up to 10% of the salary threshold.
There is a special rule for highly compensated employees. Under this rule, workers must receive annual compensation of at least $107,432. Out of that total, $684 must be paid as a weekly salary.
How overtime pay is calculated
For non-exempt workers, overtime pay is calculated under the FLSA. There are special rules for federal employees. Overtime pay for non-federal workers is determined by multiplying the rate of pay for straight time by the number of overtime hours that were worked and then adding half of the workers’ regular hourly rate multiplied by all of the overtime hours. Overtime work that is approved or ordered has to be compensated. Employers must also pay overtime pay to workers who are permitted to work overtime hours unless they work flexible schedules.
When overtime pay is calculated, the employers must include any locality payment or special supplemental rate in the rate of pay for straight time. The regular hourly rate is calculated by dividing the total amount paid to the employee by the number of hours worked in the workweek.
Example of overtime pay calculation
The following is an example of how an employer calculates overtime pay under the FLSA for a worker who earns an annual base pay of $50,000 but is non-exempt. In the example, the worker receives a shift differential for working at night.
- Total hours worked in the workweek: 50
- Overtime hours: 10 hours
- Night work: 30 hours
- Straight time pay rate: 50,000
- Hourly Rate of Basic Pay: 50,000/2,087 = $23.96 per hour
- Total Remuneration for basic pay at 40 hours: $23.96 x 40 = $958.40
- Night work pay for 30 hours: $23.96 x 0.10 = $2.40
- $2.40 x 30 hours = $72.00
- Straight time pay for overtime hours worked: %23.96 x 10 hours = $239.60
- Total remuneration: $958.40 + $72 + $239.60 = $1,270.00
- Hourly regular pay rate: $1,270/50 hours = $25.40
- FLSA Overtime Pay: Straight time pay rate x all overtime hours worked, or $23.96 x 10 hours = $239.60
- One-half of the hourly regular pay rate multiplied by all overtime hours:
- 0.5 x $25.40 = $12.70
- $12.70 x 10 hours = $127.00
- Total FLSA Overtime Pay: $239.60 + $127.00 = $366.60
- Basic Pay =$958.40
- Night Pay = $72.00
- FLSA Overtime Pay = $366.60
- Total Weekly Pay: $958.40 + $72.00 + $366.60 = $1,397.00
Get help from Swartz Swidler
The overtime pay rule can be difficult to understand. If you are a non-exempt worker or a worker who has been misclassified as exempt and believe that your employer has failed to pay overtime compensation to you, you may be entitled to recover compensation. Contact the law firm of Swartz Swidler to schedule a consultation so that you can learn more about your rights by calling us at 856.685.7420.