As a business owner, or private employer it’s important to make sure that you’re compensating your employees for all time worked—and that includes overtime hours in addition to the minimum wage or the hourly rate in your state.
Some people who have been working for decades are familiar with such terms as double-time, straight time, overtime wages, vacation time, 40-hour week, salaried basis, calendar week, bonus programs, annual salary, rights to hours, overtime payments, earnings during overtime hours, one-half overtime, hour overtime and the like.
Just like all the terms above, in general, there are various categories of employees ranging from staff employees to non-exempt employees, salaried-exempt employees non-exempt salaried employee, assistant managers, managers, supervisors, sales employees, those who punch a timeclock regularly, adult workers who work daily, agricultural workers, who prefer a workweek basis schedule and others who all provide an employer a type of service.
Under certain circumstances, some employees or professional employees may be eligible for overtime pay or hours of overtime whereas other employees may not; employment depends on the employee’s specific case.
Moreover, as a business proprietor, how are you able to find out if you have to offer overtime to your salaried personnel? Keep reading to get the answers about salaried employee overtime laws, overtime requirements, overtime premiums, overtime pay requirements, hours, and more.
Do Salaried Workers Get Overtime Pay?
Let’s jump right in and see if salaried employees have the right to overtime pay, or if hourly employees, and non-exempt employees, are eligible for overtime.
Under the Fair Labor Standards Act or FLSA, employees who are considered “exempt” from overtime pay are those classified as salaried, meaning they are not eligible to receive overtime compensation, even if they exceed 40 hours of work in a single week.
For instance, a salary-based exempt employee such as a marketing manager earning $52,000 per year ($1,000/week) should receive that same pay on any given week regardless of the number of hours worked — be it 34, 42, 38, or 55 hours — without owing overtime pay.
If a salaried, exempt employee is eligible for overtime the employer must make sure all overtime regulations and requirements are fulfilled.
Conditions for Salaried Workers to Become Eligible for Overtime
Under federal law, all nonexempt employees are eligible for overtime pay at the one-half time their regular rate of pay — and, as such, if a salaried employee is considered nonexempt, they’re entitled to overtime wages.
To be considered exempt from overtime pay, salaried employees must:
Have a salary above the U.S. Department of Labor’s minimum salary threshold of $684 per week (which is the equivalent of $35,568 per year); and
Meet the qualifications for one of the FLSA’s overtime exemptions.
Under the FLSA, job duties are the main factor considered when evaluating overtime exemptions. Some of the exemptions include:
Computer employee exemption
Outside sales exemption
Highly compensated employees’ exemption
Examples and More on FLSA
If an employee makes more than $35,568 ($684/week) annually and meets the duties for an overtime exemption, then that employee is exempt from being eligible for overtime pay. In contrast, if they do not meet these criteria, they are considered nonexempt and should receive overtime pay.
Thus, when you hire a receptionist for the administrative exemption, be sure to check their salary. If they earn less than $684 per week, then they should be paid overtime for any hours worked over 40 in a given week; if their salary is more than that, they are exempt and unable to collect overtime wages.
The Fair Labor Standards Act typically only applies to white-collar work regarding overtime exemptions, minimum salary threshold, and duties tests. These labor laws do not apply to blue-collar workers, first responders, firefighters, or law enforcement officers; however, certain state laws might have additional overtime regulations for salaried workers that could be stricter than the federal law. It is important to research local requirements to ensure appropriate payment for all employees eligible for overtime pay.
Calculating Overtime Wages
All of this can be a confusing process when it comes to calculating overtime pay for salaried employees. So, let’s now discuss how to calculate overtime wages for salaried employees eligible for overtime pay.
For salaried personnel, the calculation of overtime wages involves a somewhat more complex procedure than those paid by the hour. If a nonexempt salaried employee earned $20 per hour and worked beyond 40 hours in any given workweek, you would be required to pay that person one and a half times their regular rate for each extra hour worked — or $30 an hour in this example.
To calculate overtime pay for a fixed-salary, non-exempt employee, you must first determine their regular hour rate by dividing their salary by the number of hours that their salary is meant to cover, then multiplying the result by 1.5.
If an employee is entitled to overtime and has a weekly salary of $700, which covers 40 hours in a workweek, you should divide that salary by 40 to get their regular rate of pay ($17.50). To calculate their overtime rate, multiply the regular rate by 1.5 ($26.25 in this case). Therefore, that means that any hours over 40 in a workweek will be compensated at $26.25 per hour.
You can easily achieve this with the right tool, for instance, employees employ tracking of all workforce hours and compute pay instantly. Workers can log in and any place anyplace in a matter of moments—no need for paper timekeeping. As the hourly platform unifies tracked time data with salary finance, staff are quickly awarded for their overtime hours each remuneration cycle. Hourly additionally synchronizes up-to-date pay information to employee compensation as well, calculating fees metrically precisely. But there is no requirement to immediately integrate all three – starting only with hour tracking would work and additional features could be added later.
Is it possible for a salaried employee to decline extra work hours? Under the FLSA, employers can terminate any employee — including salaried employees — who refuse to work overtime.
It’s vital to note that salary-exempt employees are given a fixed sum no matter the number of hours they work— as such, it’s important for employers to not take advantage of this situation. If you classified an employee as salaried and set their pay under the premise of a 40-hour week, then avoid forcing them to exceed that limit; doing so could lead to major difficulties with holding onto said employees.
Ensuring that your business adheres to all overtime regulations on a daily basis is the bottom line in terms of paying overtime.
The takeaway? As a business owner, it’s vital to abide by overtime and labor laws on a regular basis, including paying extra time pay for eligible salaried staff. It is advisable to consult with a labor attorney before determining whether salaried employees qualify for overtime pay; this will ensure that you are compliant with overtime laws and therefore protect your business from any potential legal repercussions.
Choose the Best
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