Overtime Labor Laws: How Does Overtime Pay Work
FairPay
The United States Department of Labor has established regulations called FairPay that govern much of Federal overtime policy.
Promising “overtime security for the 21st century workforce,” workers may think that they have an ace in the whole against employers who abuse their time. Because overtime labor laws do not apply to all workers, they are often the focus of employment law questions.
Under FairPay, all workers must get paid at least the minimum wage ($7.25 per hour, effective July 24, 2009) for all hours worked. Overtime work, considered anything above 40 hours in any given work week must be compensated at one and a half times the hourly wage of a worker if that worker is not exempt.
FairPay does not require employers to pay employees more than their regular wage for weekend or holiday work unless working on those days pushes them above the forty hour work week. In such a case, workers must be paid time-and-a-half for all hours worked in excess of forty for that week. If an employee normally requires bonus pay, it counts toward the hourly pay of an employee, meaning that in some cases overtime pay will actually be more than a straight 1-1/2 times a stated hourly wage.
When Federal overtime labor laws apply, they are not permitted to be waived based on an agreement between an employee and an employer.
Overtime protection applies to workers earning less than $23,660 annually or less than $455 per week, although it is possible for a non-exempt employee to make over that amount and still fall under protected status for overtime pay.
Image Credit: Wikimedia Commons/Rodw
Exemptions
As with most Federal Regulations, exceptions exist that disqualify workers from FairPay protection:
1. Firefighters and law enforcement personnel working for a government agency that employs fewer than five people do not qualify for FairPay under overtime labor laws. For qualifying employees in this category, overtime is calculated based on a “work period” because of the irregular hours often found in these professions. Firefighters qualify for overtime when working more than 212 hours in a 28 day period and police qualify when working more than 171 during the same period.
2. Nursing facility workers also have special overtime labor laws. Under these rules, overtime can be calculated based on a standard 40 hour work week or by an “8 and 80” system that pays overtime when an employee works more than 8 hours in a day or 80 hours in any 14 day period.
3. Employees of companies that have a sales or other business volume of less than $500,000 and do not engage in interstate commerce, regular interstate communications, or handle or record interstate shipments are not entitled to overtime pay. If the company engages in interstate activity, however, overtime labor laws likely apply even if the company does less than $500,000 in business.
4. White collar workers. “Employees whose primary duties are managerial, administrative, or professional in nature” compose the largest block of exempt workers. Special rules apply for a variety of occupations, so employers and employees should check the FairPay Web site to endure compliance. Generally speaking, white collar workers are exempt from overtime labor laws as long as their total hours worked during a week falls below the federal minimum wage.
Employee Records
Under overtime labor laws, employers are required to keep records that document the hours employees work and how much they were paid. If audited, employers need to be able to prove compliance with minimum wage laws and overtime labor laws The employer must also document which employees are exempt. As you can probably tell, overtime labor laws are somewhat complicated, so employers may need to consult attorneys skilled in labor law to make sure their record keeping and wage practices are in compliance.
