HR Compliance 101: Overtime Rules

I wasn’t always an HR Guru.  Before this, I was a house painter for five years.  Five years — I didn’t think I’d ever finish that house.

Federal overtime rules are established as part of the Fair Labor Standards Act of 1938 (FLSA).  Overtime pay is not required by all employers and even with companies that have the requirement, it does not apply to all employees.  In it’s simplest terms the employer is required to pay a premium rate equal to the employee’s pay rate for the week times 1.5 for all hours worked over 40 hours for any given week.  It is important to know if the overtime rules apply to your company and if your employees are exempt from overtime rules and how to properly calculate the premium pay for overtime.

It is also important to note that the state, county or city you perform the work in also can increase the requirement for overtime rules.  Some states such as Alaska, California, Nevada and Puerto Rico require overtime to be paid for every day the worker has more than 8 hours worked.  Some states require overtime based on the number of days worked not just the hours, so in some states an employee should be paid overtime on the 6th day worked or the 7th day worked. And further yet, in some states the employee’s overtime rate increase to double time on the 7th day.  It is important to visit the website for your state and become familiar with the laws that apply.

Federal overtime rules do not apply to all businesses.  I have written about when the FLSA would be applicable to a business in a previous article and instead of repeating that here I will use some technology to hyperlink to that article here.  HR Compliance 101: Charlie the Tuna and the Fair Labor Standards Act (FLSA)

Basically the FLSA applies to your business if you employee at least two people and you are an “Enterprise” with an annual dollar volume of $500,000 or if your business provides medical or nursing care for residents, schools/preschools or is a government agency.  Otherwise, the FLSA only applies to individual employees who engage regularly in Interstate Commerce.  Examples of employees who are involved in interstate commerce include those who: produce goods (such as a worker assembling components in a factory or a secretary typing letters in an office) that will be sent out of state, regularly make telephone calls to persons located in other States, handle records of interstate transactions, travel to other States on their jobs, and do janitorial work in buildings where goods are produced for shipment outside the State.

If you do not, as a company, have a dollar volume of $500,000 and you do not have employees engaged in Interstate Commerce, then the FLSA and its overtime rules do not apply to your employees.  But keep in mind many states have their own overtime rules that may apply even when the federal law does not.