Overtime Payment

 Overtime Payment 

Overtime pay is calculated: Hourly pay rate x 1.5 x overtime hours worked. Here is an example of total pay for an employee who worked 42 hours in a workweek: Regular pay rate x 40 hours = Regular pay, plus. Regular pay rate x 1.5 x 2 hours = Overtime pay, equals.

Calculate Overtime Pay for Hourly and Salaried Employees

Including Regulations for Overtime to Some Exempt Employees

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Table of Contents

• How Overtime Works
• Federal Overtime Regulations
• State Overtime Regulations
• Calculating Overtime for Hourly
• Overtime Record Keeping

BY 

JEAN MURRAY

 

Updated February 05, 2021

The federal government (specifically the Department of Labor) assumes that all employees must be paid overtime if they work more than a certain number of hours in a week. Even some salaried employees must be paid overtime.

Calculating overtime for hourly employees is fairly simple, but some salaried employees also must be paid overtime. This calculation is a little trickier. 

An Important Change in Overtime Regulations for Exempt Employees

Some lower-paid exempt employees must be paid overtime. And, effective January 1, 2020, new overtime rules increased the level of pay below which these employees qualify for overtime. The new rule has a higher salary level for exemption from overtime. Read this article then take a look at the pay for your exempt employees to make sure you are complying with these new regulations.

The new Department of Labor rule, effective January 1, 2020. increases the salary level for exemption from overtime, from $455 a week to $684 a week. This change applies to exempt employees: (executive, administrative, professional, outside sales, and computer employees).1

The former pay level was that a salaried employee paid more $455 a week ($23,660 a year) or more was not subject to overtime. The increase means that an exempt employee who is paid $684 a week (the equivalent of $35,568 a year) or more would not be subject to overtime.

In addition, the total annual compensation level for "highly compensated employees (HCEs)" has been increased from the current level of $100,000 to $107,432 a year. To be exempt as an HCE, an employee must also receive at least the new standard salary amount of $684 per week on a salary or fee basis (without regard to the payment of non-discretionary bonuses and incentive payments)..2

How Overtime Works

If an employee works more than a specified number of hours in a week, the additional hours are called overtime. Pay for any hours worked as overtime are paid at a higher rate than regular hours. 

Overtime pay for hourly employees is the additional pay rate paid for working more than a specific number of hours in a week. The federal minimum for overtime for hourly employees is that the person ​must be paid one and a half times the regular hourly rate for work over 40 hours a week3. So, an hourly employee working 45 hours a week for $10 an hour would be paid $10 for 40 hours and $15 an hour for the 5 hours of overtime. 

Salaried employees are typically exempt from overtime if their weekly income is over a specific amount. The new regulations, effective January 1, 2020, require that exempt employees paid less than $684 a week receive overtime pay. An employer can continue to include non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the salary threshold.2

You must pay at lease the minimum for overtime, but you may decide to pay employees at a higher rate, and for overtime starting at lower hours per week. Some employers, for example, pay "double time" (twice the normal hourly rate) for holidays. The Department of Labor does not require employers to pay overtime for night, holiday, or weekend work; these rates are determined by the employer or by union contracts.

Employee Pay & Overtime Regulations

The Wage and Hour Division of the U.S. Department of Labor regulates overtime and other pay provisions through the Fair Labor Standards Act. In addition to overtime provisions, the Act regulates child labor and minimum wage activities of U.S. employers.

The Fair Labor Standards Act requires that hourly employees who work more than 40 hours in a workweek must be paid at a higher rate for the overtime hours, at a minimum of 1 1/2 times the employee's regular pay rate.4

State Overtime Regulations

Some states have regulations for overtime and other labor laws that exceed those of the federal government. In this case, more strict regulations must be met. Check with your state's labor department to review state labor laws, or check with your employment attorney.

Calculating Overtime for Hourly Employees

Overtime pay is the amount of overtime paid to each employee in a pay period. Overtime pay is calculated: Hourly pay rate x 1.5 x overtime hours worked.

Here is an example of total pay for an employee who worked 42 hours in a workweek:

• Regular pay rate x 40 hours = Regular pay, plus
• Regular pay rate x 1.5 x 2 hours = Overtime pay, equals
• Total pay for the week.

A more detailed example: 

• An employee works 50 hours in a week.
• Her normal pay rate is $15 an hour.
• So she is paid $600 for her 40 hours at $15 an hour, plus $225 for her additional 10 hours of overtime (at $15 x 1.5 x 10 = $225).
• Her total pay for the week would be $825. 

Why Some Employees Are Exempt From Overtime

Because of the nature of their work, some employees are considered to be exempt from receiving overtime pay. In order to be classified as exempt, an employee must have specific types of job duties.

The Fair Labor Standards Act (FLSA) recognizes executive, administrative, professional, outside sales, and some computer employees as exempt. Exempt classification is on a case-by-case basis and is not based on the job title of the employee.5

Calculating Overtime for Exempt Employees

As noted above, lower-paid exempt employees may be eligible for overtime. To calculate overtime for these employees, use the same overtime policy you have for hourly employees. Then you can use one of two methods:  

Method 1: It's assumed that an exempt employee's salary is based on 2080 hours of work per year (basically, 50 weeks of work and two weeks of vacation). Using that assumption, you can calculate the employee's hourly rate. Let's say the employee makes $31,000 a year. Dividing $31,000 by 2080 gives an hourly rate of $14.90. You can use that hourly rate to calculate overtime for a week of work. 

Method 2: Here's another way: Take the employee's pay for a week and divide it by the normal hours of work during that week. If the employee is paid $500 for a week and is expected to work 36 hours, the employee's hourly rate is $13.89 an hour.

Overtime usually begins at 40 hours, so if an employee works 45 hours in the week, they would be paid at the regular rate of $13.89 an hour for up to 40 hours, and at 1.5 x $13.89 for the additional 5 hours. 

The total pay for that employee for the pay period would be $13.89 x 40 = $555.60 plus 20.84 x 5 hours = $104.16 totaling $$659.76. 

Record Keeping of Overtime

The FLSA requires employers to keep records of payments to employees, including overtime pay. In the case of an audit, an employer must be able to prove payment of overtime that meets FLSA requirements.

If an employee works more than a specified number of hours in a week, the additional hours are called overtime.

The FLSA requires employers to keep records of payments to employees, including overtime pay. In the case of an audit, an employer must be able to prove payment of overtime that meets FLSA requirements.

Here's how the overtime pay calculation works:

Overtime pay is the amount of overtime paid to each employee in a pay period. Overtime pay is calculated: Hourly pay rate x 1.5 x overtime hours worked.

Here is an example of total pay for an employee who worked 42 hours in a workweek:

• Regular pay rate x 40 hours = Regular pay, plus
• Regular pay rate x 1.5 x 2 hours = Overtime pay, equals
• Total pay for the week.

A more detailed example:

An employee works 50 hours in a week. Her normal pay rate is $15 an hour. So she is paid $600 for her 40 hours at $15 an hour, plus $225 for her additional 10 hours of overtime (at $15 x 1.5 x 10 = $225). Her total pay for the week would be $825.

Hours worked after 40 in a week are paid at 1.5 x regular rate of pay.

Hours worked after 8 in a day are paid at 1.5 x regular rate of pay.

Hours worked after 12 in a day are paid at 2x regular rate of pay.

Hours worked on the 7th day in a row start at 1.5 x for first 8 hours, then 2x for hours thereafter.

If you’re not in California, it’s more like “hours after 40 in a week are paid at 1.5x regular rate of pay” and that’s it.

For the most part it’s pretty easy, unless you’re in a situation where regular rate of pay is tricky to figure out - if your hourly rate changes depending on what you’re doing (some places pay differently if you’re actively working, or if you’re traveling to a work site, for instance).

Somewhere at your workplace there is a posted sign that says what your workweek is. Midnight Saturday or Sunday are common as a dividing line. You take that time and divide the week up into 24 hour chunks. Then you “deal your hours” into those chunks, and do the calculations for daily OT.

So, if your workweek were Monday 12AM to Monday 12AM, the bins correspond to the days of the week, starting at midnight. So, if you worked from 6PM Tuesday to 6AM Wednesday, and that’s it, you’d have worked 2 days, and 6 hours on each day, so you’d not get OT for any of those hours. If, though, you started work on Wednesday at 8PM and worked til Thursday at 6AM, you’d now have 6 hours on Tuesday, (6+4)=10 hours on Weds, and 6 hours on Thursday, so you’d get 2 hours of OT for Weds.

The workweek has to be stable and not changing - the employer can’t have the work week start on one day and time for one week, and change it for the next.

There’s a whole handbook from the Department of Labor Standards Enforcement (DLSE) in California that describes all this in detail, as well as all the schemes that people have come up with to try and “beat the system” and why they don’t work. Some other states have similar guides, and there are, of course, legions of attorneys who will help you “get the best deal” whether you are on the employer or employee side.

First of all, IT companies are abide to follow Factory act 1948.

An adult who is above 18 years cannot work for more than 48Hrs a week or 9 continues hours a day. According to Section 51 of the Act, the spread over should not exceed 10-1/2 hours.

As per Factory act 1948, under Sec. 59 it is mentioned that where a worker works in a factory for more than 9 hours in any day or for more than 48 hours in any week, he/she shall, in respect of overtime work, be entitled to receive wages at the rate of twice his/her ordinary rate of wages.

Also as per law a rest interval of at least half an hour should be provided, in such a way that no period of work shall exceed 5-1/2 hours.

Now to talk about IT companies almost everyone know that people work more than normal hours but as much I know there is no policy that asks employee to work so. It’s always said that the task is assigned to you & as per estimates you should complete it in X hrs considering working for X/#days = 9Hrs at max.

If you are working in service provider & aware of billing part, the client is only charged for 8 Hours whereas considering INDIAN labor laws & a short break time in between along with two holidays in a week, your organization can ask you to work for 9Hrs.

If someone is working for more than 9Hrs a days let’s say 10–12 hrs, a common working hours for many IT professional then HR / organization would only count it to your inability to complete the task but they CANNOT force you to work so.

If you have a record of you working for more than legal working hours & is been asked by your organization (Which I am sure they won’t leave any trace of asking you to work extra) you can certainly approach the court for justice. Now WAIT the IMP things here. Remember Sunny Deol “Tarikh pe Tarikh” same things happen in court so the litigation will take enormous time to complete the procedures. You may already have crossed half of your life going to court for justice. Now in between that period think that which organization would like to have you work for them, a litigation seeker employee because the “TRUTH IS NOT YET REVEALED”. You can be a suspect for money seeker for other org. Having many other softies in market there would be hardly a choice to have your as an employee unless you are extreme extra ordinary.

I know I am little bit apposing you depriving your rights for going court to have justice but many INDIAN thinks more than that, Family values & financial needs. Think about that before you proceed.

Simple is change the job/organization & start fresh, I think its not so difficult in IT if you have even 2 years of experience or more

The hotel industry supports 8.3 million American jobs in communities across the country and offers desirable assets that attract employees from all walks of life, including flexible hours, career growth, training opportunities, and good-paying jobs and benefit packages. The majority of jobs offered in the hotel industry already have starting wages above the minimum wage, and employers currently have the flexibility to set salary parameters that foster a strong team environment, which allow for good benefits, higher pay, and workable schedules. The industry is ripe with opportunities and has a tremendous track record of providing the training and resources our employees need to move up through the ranks to more senior positions. AHLA embraces policies that encourage business growth, workforce flexibility, and an entrepreneurial spirit.

On September 24, 2019, the Department of Labor released its final rule to update our nation's federal overtime regulations which went into effect on January 1, 2020. 

Some of the core provisions include:

• Salary threshold for administrative, executive, and professional employees (the “white collar” exemptions) will now be $684/week, or $35,568/year.  This will replace the current threshold of $455/week or $23,660/year (in place since 2004)
• The Highly Compensated Employee threshold will go from $100,000 (in place since 2004) to $107,432. 
• There are NO changes to the duties test.
• There are NO automatic updates (which was a focus for AHLA’s comments to the DOL – see attached).
• Employers may use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices.

The final regulation will be effective January 1, 2020.  This will give employers slightly more than 3 months to budget and plan accordingly.

Is a Hotel Employee Entitled to Overtime Pay?

Hotel employees are often required to work long hours and extend their workday beyond their regular shift.  In addition to working extra hours, many hotel employees are “shorted” on their break and rest times by being required to be “on call” and accessible at all times.  Some hotels require employees to have hand held radios or cell phones so that they can be contacted when a customer makes a request or if management needs something done.  Although this helps provide better service to the customer, it is not fair to the hotel employee and violates federal overtime pay laws.

Under the Fair Labor Standards Act (FLSA), non-exempt employees are entitled to overtime pay for all hours worked past 40 in one week. The company must track all hours worked and pay the appropriate overtime wages.

In general, “hours worked” includes all time an employee must be on duty, or on the employer’s premises or at any other prescribed place of work, from the beginning of the first principal activity of the work day to the end of the last principal work activity of the workday. In addition, this can include time taken away from meal and rest breaks.

If a hotel fails to provide the overtime wages the employees are entitled to, they violate the FLSA and can become the subject of an overtime pay lawsuit.

In a welcome development for hotel employees, the industry will now have to fix proper shifts and pay overtime if they work for more than eight hours a day, apart from ensuring workers' health, safety and welfare facilities