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Overtime Pay Requirements of the FLSA
This fact sheet provides general information concerning the
application of the overtime pay provisions of the FLSA.
Characteristics
An employer who requires or permits an employee to work overtime
is generally required to pay the employee premium pay for such
overtime work.
Requirements
Unless specifically exempted, employees covered by the Act must
receive overtime pay for hours worked in excess of 40 in a workweek
at a rate not less than time and one-half their regular rates
of pay. There is no limit in the Act on the number of hours
employees aged 16 and older may work in any workweek. The Act
does not require overtime pay for work on Saturdays, Sundays,
holidays, or regular days of rest, as such.
The Act applies on a workweek basis. An employee's workweek
is a fixed and regularly recurring period of 168 hours -- seven
consecutive 24-hour periods. It need not coincide with the calendar
week, but may begin on any day and at any hour of the day. Different
workweeks may be established for different employees or groups
of employees. Averaging of hours over two or more weeks is not
permitted. Normally, overtime pay earned in a particular workweek
must be paid on the regular pay day for the pay period in which
the wages were earned.
The regular rate of pay cannot be less than the minimum wage.
The regular rate includes all remuneration for employment except
certain payments excluded by the Act itself. Payments which
are not part of the regular rate include pay for expenses incurred
on the employer's behalf, premium payments for overtime work
or the true premiums paid for work on Saturdays, Sundays, and
holidays, discretionary bonuses, gifts and payments in the nature
of gifts on special occasions, and payments for occasional periods
when no work is performed due to vacation, holidays, or illness.
Earnings may be determined on a piece-rate, salary, commission,
or some other basis, but in all such cases the overtime pay
due must be computed on the basis of the average hourly rate
derived from such earnings. This is calculated by dividing the
total pay for employment (except for the noted statutory exclusions)
in any workweek by the total number of hours actually worked.
Where an employee in a single workweek works at two or more
different types of work for which different straight-time rates
have been established, the regular rate for that week is the
weighted average of such rates. That is, the earnings from all
such rates are added together and this total is then divided
by the total number of hours worked at all jobs.
Where non-cash payments are made to employees in the form of
goods or facilities, the reasonable cost to the employer or
fair value of such goods or facilities must be included in the
regular rate.
Typical Problems
Fixed Sum for Varying Amounts of Overtime: A lump sum paid for
work performed during overtime hours without regard to the number
of overtime hours worked does not qualify as an overtime premium
even though the amount of money paid is equal to or greater
than the sum owed on a per-hour basis. For example, no part
of a flat sum of $90 to employees who work overtime on Sunday
will qualify as an overtime premium, even though the employees'
straight-time rate is $6.00 an hour and the employees always
work less than 10 hours on Sunday. Similarly, where an agreement
provides for 6 hours pay at $9.00 an hour regardless of the
time actually spent for work on a job performed during overtime
hours, the entire $54.00 must be included in determining the
employees' regular rate.
Salary for Workweek Exceeding 40 Hours: A fixed salary for a
regular workweek longer than 40 hours does not discharge FLSA
statutory obligations. For example, an employee may be hired
to work a 45 hour workweek for a weekly salary of $300. In this
instance the regular rate is obtained by dividing the $300 straight-time
salary by 45 hours, resulting in a regular rate of $6.67. The
employee is then due additional overtime computed by multiplying
the 5 overtime hours by one-half the regular rate of pay ($3.335
x 5 = $16.68).
Overtime Pay May Not Be Waived: The overtime requirement may
not be waived by agreement between the employer and employees.
An agreement that only 8 hours a day or only 40 hours a week
will be counted as working time also fails the test of FLSA
compliance. An announcement by the employer that no overtime
work will be permitted, or that overtime work will not be paid
for unless authorized in advance, also will not impair the employee's
right to compensation for compensable overtime hours that are
worked.
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