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Overtime Pay and Labor Laws FAQs

If you want to know if you are entitled to overtime, start with “Am I entitled to overtime?” for an overview of the types of employees who are typically required to be paid overtime. If you want to know how to calculate overtime pay for hourly, day rate and salaried non-exempt employees, take a look at “Calculating Overtime”. If you’re thinking about pursuing a claim against your employer, take a look at “Overtime Claims / Cases” to learn about your rights.

The overtime laws are complex, vary by state, and employment situations can be unique. If you still have some questions or would like to ask about your personal situation, please contact us by email, telephone or use our convenient intake form in the sidebar on the right. Your inquiry is confidential.

1. Am I entitled to overtime?…and other common questions
What types of employees are entitled to overtime pay?

There are two types or categories of employees, exempt and non-exempt. Exempt employees are those who, due to their job duties, are not legally entitled to overtime and are, therefore, “exempt” from the laws regarding overtime pay. Non-exempt employees are those whose job duties do not fit within any of the exemptions provided for under the FLSA and are, therefore, entitled to overtime pay.

The exemptions provided for under the FLSA are very limited and narrow, and the burden is placed on the employer to prove that any given employee or class of employees is not exempt.

While the issue of exemptions can be complicated, the following is a general overview of the primary tests devised by the Department of Labor:

Executive Exemption

To qualify for the executive employee exemption, all of the following tests must be met:

The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week;

The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;

The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and

The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

Administrative Exemption

To qualify for the administrative employee exemption, all of the following tests must be met:

The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;

The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

Professional Exemption

To qualify for the learned professional employee exemption, all of the following tests must be met:

The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;

The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;

The advanced knowledge must be in a field of science or learning; and

The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

To qualify for the creative professional employee exemption, all of the following tests must be met:

The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;

The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

Computer Employee Exemption

To qualify for the computer employee exemption, the following tests must be met:

The employee must be compensated either on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour;

The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below;

The employee’s primary duty must consist of:

  1. The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
  2. The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;
  3. The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or
  4. A combination of the aforementioned duties, the performance of which requires the same level of skills.

Outside Sales Exemption

To qualify for the outside sales employee exemption, all of the following tests must be met:

The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and

The employee must be customarily and regularly engaged away from the employer’s place or places of business.

Highly Compensated Employees

Highly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 or more (which must include at least $455 per week paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee identified in the standard tests for exemption (see above).

Blue Collar Workers

The exemptions provided for “white collar” employees do not apply to manual laborers or other “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy. Non-management employees in production, maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers are entitled to minimum wage and overtime premium pay under the FLSA, and are not exempt no matter how highly paid they might be.

Collective Bargaining Agreements

The FLSA provides minimum standards that may be exceeded, but cannot be waived or reduced. Employers may, on their own initiative or under a collective bargaining agreement, provide a higher wage, shorter workweek, or higher overtime premium than provided under the FLSA.

Can I be forced to work overtime?

The Fair Labor Standards Act (FLSA) does not limit the number of hours in a day or days in a week an employee may be required or scheduled to work, including overtime hours, if the employee is at least 16 years old. It only requires that requires covered, nonexempt employees be paid overtime pay at a rate of not less than one and one-half times their regular rate of pay after 40 hours of work in a workweek.

Employers are free to set and enforce work schedules and the employees must comply with the schedule that is given to them. Employers can require employees to work overtime; however, they must properly pay non-exempt employees for any overtime hours they work. Please see the following for additional details: http://www.dol.gov/whd/regs/compliance/hrg.htm#content.

Can my employer make a ‘different deal’ with me for overtime?

In almost all cases no. Employers and employees who are covered by the FLSA are not free to bargain for either a wage that is below the minimum wage, or for work in excess of 40 hours per week without paying a premium (typically time and a half) for overtime hours. Many employers wrongly believe that they can “cut a deal” with employees to avoid paying overtime rates – they cannot.

What is I didn’t get permission or ask for the time I worked?

In most cases, failure to ask is not a defense for an employer in an FLSA case.

What if I get “Comp Time” instead of overtime pay?

The granting of comp time instead of paying for overtime is not generally permitted, unless you work for the government.

What if I agreed to work for a ‘flat salary’?

If an employee is covered by the FLSA, and most are, an employer cannot disregard an employee’s overtime hours even if the employee agreed to work for a fixed amount of pay, regardless of the number of hours actually worked. While the method of calculating the overtime due to the employee may vary, the employee is entitled to overtime pay for all hours over 40 worked during any given work week.

What is “Chinese Overtime”?

If an employee is paid a fixed salary each workweek for hours that vary up and down from week to week, the employer may use an overtime calculation method called “fixed salary for fluctuating workweeks”. This is the method that some companies in the past used to refer to informally as “Chinese overtime”.

It is easily the most favorable method for employers of computing overtime, but certain requirements have to be met. To use this method:

  • the employee must have a work schedule with fluctuating hours, i.e., not be on a fixed schedule
  • and must be paid a fixed salary that is meant to be straight-time compensation for all hours worked in a workweek, whether the employee works less than or more than 40 hours per week.
  • With almost no exceptions, no reduction in the salary may be made for short workweeks.
  • In addition, the salary must be large enough to ensure that the regular rate will never drop below minimum wage.

In such a situation, the regular rate is determined by dividing the fixed salary by the number of hours worked that week. Since the fixed salary is already deemed to compensate the employee at straight time for all hours worked, any overtime hours only need to be paid at “half-time”, instead of time and a half. The employee has already been paid straight time by virtue of the salary, and the straight time is only paid once, so the overtime hours will be paid at half the regular rate, thus bringing the employee up to time and a half. In workweeks in which the overtime is high, the regular rate will be low, and the employer will enjoy a lower per-hour overtime cost.

The drawback for the employer is that if work is slow, and the employee is only working 25 or 30 hours per week, the fixed salary must still be paid.

What if I am a tipped employee?

If an employer elects to use the tip credit provision, it must inform the employee in advance and must be able to show that the employee receives at least the minimum wage when direct wages and the tip credit allowance are combined. If an employee’s tips combined with the employer’s direct wages do not equal the minimum hourly wage, the employer must make up the difference.

Employees must retain all of their tips, except to the extent that they participate in a valid tip pooling or sharing arrangement. A tip pool can often be invalidated if tips are shared with managers, dishwashers, cooks, chefs or others who are not entitled to share in tips.

What if I am an ‘independent contractor’?

There are specific legal requirements for determining if someone is an independent contractor. Often times employers will label someone an “independent contractor” when, in fact, they are not. There is no single rule or test for determining whether an individual is an independent contractor or an employee for purposes of the FLSA. The Supreme Court has held that it is the total activity or situation which controls. Important factors to consider include:

  1. The extent to which the services rendered are an integral part of the principal’s business.
  2. The permanency of the relationship.
  3. The amount of the alleged contractor’s investment in facilities and equipment.
  4. The nature and degree of control by the principal.
  5. The alleged contractor’s opportunities for profit and loss.
  6. The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
  7. The degree of independent business organization and operation.

While most true independent contractors are not entitled to overtime, if you are being misclassified as one, you are entitled to receive overtime pay.

What if I get a ‘bonus’ instead of overtime?

While some employers may offer to compensate employees for overtime work by paying them some form of bonus, this type of arrangement is not generally permitted by law.

What if I didn’t report or ask for my overtime?

It probably does not matter. It is the employer’s obligation to control and document your work. If the employer does not want work to be done it must prohibit it. Failure to ask for overtime is usually not a defense, unless the employer has a requirement and/or policy that all time be reported and actually enforces it, or if an employee’s failure to report or ask means that the employer did not know (or have reason to know) work was being done.

2. Specific Industries
Oil and Gas Field Workers

Oilfield and gas technical services workers are often required to work well over 40 hours a week; however, not employers are paying these workers overtime pay as required by federal labor laws for this mandatory overtime work.

Employers are allowed to make their employees work large amounts of overtime but the Fair Labor Standards Act requires that to non-exempt hourly employees be paid one-and-a-half times their regular rate of pay for all hours worked over 40 per week.

Many companies pay oilfield and gas workers under a day-rate method. While an employer is permitted to pay non-exempt employees on day rate basis, it must still pay such employees overtime compensation pay for hours worked in excess of 40 per week. Courts have also held that if an employee’s wages are reduced when they work less than a full day, the employer did not have a valid day-rate plan and should have been paying employees overtime for any hours worked over 40 per week.

Truck Drivers

The Fair Labor Standards Act (FLSA) provides an overtime exemption for employees who are regulated by the Department of Transportation. The exemption applies to employees who are:

  • Employed by a motor carrier or private motor carrier (generally defined as a person providing motor vehicle transportation for compensation or one shipping goods by motor vehicle to further a commercial enterprise)
  • Driver’s helpers, loaders, or mechanics whose duties affect the safety of operation of motor vehicles in interstate commerce
  • Not covered by the small vehicle exception (if the employee drives or works on vehicles that weigh less than 10,000 pounds, the exemption does not apply)
  • For additional information, please see http://www.dol.gov/whd/regs/compliance/whdfs19.pdf.

Computer / IT / Tech Support

Employers often misclassify computer IT and tech support positions as exempt. While the FLSA does provide an exemption for certain computer-related positions, most IT and tech support duties do not qualify under this exemption.

To qualify for the computer employee exemption, the following tests must be met:

The employee must be compensated either on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour;

The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below;

The employee’s primary duty must consist of:

  1. The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
  2. The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;
  3. The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or
  4. A combination of the aforementioned duties, the performance of which requires the same level of skills.
Nurses / Therapists

While nurses who are paid on salary or fee basis can be exempt from the overtime regulations, those paid under a hybrid (fee + hourly) system are not exempt and are entitled to overtime pay.

Under the professional exemption — requires that an employee be compensated on a salary or fee basis of at least $455 per week and that the employee’s primary duty is work that requires advanced knowledge in a field of science or learning that is acquired by a prolonged course of specialized intellectual instruction.

Nurses who are paid on a salary or fee basis generally meet the requirements of this exemption as long as they make at least $455 per week. However, nurses that are paid hourly are required to be paid overtime.

Recently some registered nurses, physical therapists and occupational therapists have filed suit under the Fair Labor Standards Act (FLSA) claiming that they were misclassified as “exempt” professionals because they were paid under both a fee basis and an hourly basis.

These employees were paid using a pay per-visit plan under which they received a certain fee amount for each visit to a patient’s home. However, they were paid on an hourly basis for other work such as conferences, staff meetings, and training time.

Under the FLSA, exempt professional employees may be paid on a “fee basis” without compromising the exemption; however, the exemption is voided if an employer pays that employee on both a fee basis and an hourly basis.

Home Health Care Workers

Good news about overtime may be on the horizon for home health workers in the United States. Currently, the Fair Labor Standards Act’s “companionship exemption” excludes overtime for home health workers, but several states provide overtime provisions, regardless. Additionally, a labor law change is under review as of December 2011 that would entitle nearly 1.8 million home care aides to overtime pay and a guaranteed minimum wage. Approval would remove from the FLSA a 36-year-old exemption for home care aides.

Home Health Care Workers Seek Overtime Pay

The FLSA governs the basic minimum wage, regular wage and overtime wages for American workers. Although most home health aides and workers already receive minimum or above-minimum wage, many do not receive overtime pay. The Supreme Court ruled against a home care aide, Evelyn Cook, regarding overtime pay, but the Labor Department is looking at the “companionship rule” for a potential update. Despite this, some states do allow for overtime for home health care workers. Read ahead for details. Home health care advocates seek to change the “companionship rule” which excludes overtime for the “care, fellowship, and protection of persons who because of old age or physical or mental infirmity cannot care for themselves.” Services are defined as household work for aged or infirm persons, meal preparation, bed making, clothing washing and other similar personal services. Companionship services does not include services performed by registered or practical nurses and other trained professionals. Also excluded from overtime are domestic service employees who reside in the household.

States Supporting Overtime for Home Health Aides

Are YOU a home health care worker or aide caring for a senior? There are over six million elderly people who require care, and often duties require long work hours. Do you want overtime compensation for your long hours? Depending on where you live, YOU may be entitled to overtime. Right now, nurses, certified nurse aides, home health care aides and others providing home health care services may be entitled to overtime. States that are friendly to the overtime concerns of home health workers include:

  • California: Overtime rules include four categories of in-home care workers, as follows.
    1. Those who are employed by non-profits and do no additional work beyond feeding, dressing, and supervising the person do not receive overtime.
    2. Those who are employed by non-profits but do additional work beyond feeding, dressing, and supervising do receive overtime.
    3. Those who are employed by non-profits but do additional work beyond feeding, dressing, and supervising do receive overtime.
    4. County-employed in-home care workers receive up to $11.50 an hour straight time per their union contracts and may also receive overtime under those contracts.
  • Colorado: Overtime pay covers in-home care workers who are third-party-employed and work beyond this definition of “companion.” Specifically, workers who help bathe and dress the person, do any housekeeping, or remind the person to take medications are considered more than “companions.” They are defined as “personal care” attendants – who are entitled to overtime. Those employed by private households, however are exempt from overtime.
  • District of Columbia: Overtime pay for companions as defined in the FLSA.
  • Hawaii: Overtime pay coverage for companions as defined in the FLSA, but note the exemption for those employed directly by private households.
  • Illinois: Overtime pay coverage for any person whose primary duty is to be a companion for aged or infirm individuals, or workers whose primary duty is to perform health care services in or about a private home. Note: These workers may fall under a general exemption for private household employers with fewer than four employees.
  • Maine: Overtime coverage for all companions as defined in the FLSA with no exemptions.
  • Maryland: Overtime pay coverage for all companions as defined in the FLSA.
  • Massachusetts: Overtime coverage for all companions as defined in the FLSA with no exemptions.
  • Michigan: Overtime coverage for companions as defined in the FLSA with an exemption for live-in workers employed solely by private household when the employer has less than two employees.
  • Minnesota: Overtime coverage after 48 hours for all companions as defined in the FLSA Note: Overtime compensation is not required for companions who are available during nighttime hours but do not actually provide services.
  • Montana: Overtime coverage for companions as defined in the FLSA, but with an exemption for those employed by private households.
  • Nevada: Overtime coverage for companions as defined in the FLSA, but with an exemption for live-in workers. Also, an overtime exemption for businesses with less than $250,000 annually in gross sales.
  • New Jersey: Overtime coverage for all companions as defined in the FLSA with no exemptions.
  • New York: Overtime coverage is required for all companions; however, third party agencies pay overtime at 150% of the minimum wage rather than the usual 150% of the regular rate of pay. Overtime coverage for live-in workers is earned after 44 hours weekly instead of the usual 40 hours, also at 150% of the minimum wage rather than the usual 150% of the regular rate of pay.
  • Pennsylvania: Overtime coverage for companions as defined in the FLSA, but with an exemption for those employed by private households.
  • Washington: Overtime coverage for most companions as defined in the FLSA, but with an exemption for live-in workers.
  • Wisconsin: Overtime coverage for most companions as defined in the FLSA, but with an overtime exemption for those employed directly by private households as well as those employed by non-profit organizations.

If you live in one of these states, contact the Lore Law Firm! We can help you navigate the complexities of each state’s provisions.

Overtime Facts: States Rights for Home Health Workers

You can visit the U.S. Department of Labor link for details on states that offer minimum wage protections for home health workers, and these states may support overtime pay for home health aides. Also, check out the US Department of Labor Fact sheet 25: the home health care industry under the FLSA. Above all, know your rights! If you are entitled to overtime pay, we can help ensure you receive it. Contact us today!

What if I am a Tipped Employee?

If an employer elects to use the tip credit provision, it must inform the employee in advance and must be able to show that the employee receives at least the minimum wage when direct wages and the tip credit allowance are combined. If an employee’s tips combined with the employer’s direct wages do not equal the minimum hourly wage, the employer must make up the difference.

Employees must retain all of their tips, except to the extent that they participate in a valid tip pooling or sharing arrangement. A tip pool can often be invalidated if tips are shared with managers, dishwashers, cooks, chefs or others who are not entitled to share in tips.

What if I am an ‘independent contractor’?

There are specific legal requirements for determining if someone is an independent contractor. Often times employers will label someone an “independent contractor” or “1099 worker” when, in fact, they are not. There is no single rule or test for determining whether an individual is an independent contractor or an employee for purposes of the FLSA. Merely labeling a worker as an independent contractor and issuing them a 1099 instead of a W-2, does not mean they are not entitled to overtime pay. The Supreme Court has held that it is the total activity or situation which controls. Important factors to consider include:

  1. The extent to which the services rendered are an integral part of the principal’s business.
  2. The permanency of the relationship.
  3. The amount of the alleged contractor’s investment in facilities and equipment.
  4. The nature and degree of control by the principal.
  5. The alleged contractor’s opportunities for profit and loss.
  6. The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
  7. The degree of independent business organization and operation.

While most true independent contractors are not entitled to overtime, if you are being misclassified as one, you are entitled to receive overtime pay.

Field Service Technician: When does the clock start?

The question of whether initial activities start the clock has been a hot issue with field service technicians.

If a field service tech must start their day at home with a call to obtain that day’s schedule, they are on the clock at that point, and all time until the end of the day must be paid. That includes traveling to the first job of the day, which for most employees would be unpaid commuting time.

What about highly paid Blue-Collar Workers?

In general, non-management employees in production, maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers are entitled to minimum wage and overtime pay, regardless of how highly paid they might be.

3. Salary & Overtime
What if I am a ‘salaried’ employee?

The manner in which an employee is paid does not determine their right to overtime pay. Rather, it is an employee’s job duties that determine if they are exempt from the overtime rules. Even if you were told that you would be paid a certain salary regardless of how much you work, you may still be entitled to overtime pay. Your right to overtime pay cannot be bargained away, avoided or refused.

What if I am a salaried employee but my pay stub shows an hourly amount?

Often an employer will break down an employee’s salary into an hourly amount for payroll purposes to accommodate the payroll system that the employer uses. The fact that your pay stub shows an hourly amount does not necessarily mean you are being paid hourly and entitled to overtime pay.

If you are paid on a salary basis, you should receive the same amount of pay for each week that you work regardless of the numbers of days or hours you work.

For example: If your weekly salary is $500 per week (which breaks down to $12.50 per hour based on a 40 hour week) and you work 35 hours for the week, you should still receive $500 in wages if you are paid on a salary basis. If you are paid on an hourly basis, you would only receive $437.50 (35 hours x $12.50).

What if I agreed to work for a ‘flat salary’?

If an employee is covered by the FLSA, and most are, an employer cannot disregard an employee’s overtime hours even if the employee agreed to work for a fixed amount of pay, regardless of the number of hours actually worked. While the method of calculating the overtime due to the employee may vary, the employee is entitled to overtime pay for all hours over 40 worked during any given work week.

4. Overtime Exemptions
What types of employees are entitled to overtime?

Please see above, under FAQ 1.

If reclassified as non-exempt, can I recover my unpaid overtime?

Yes. Your employer probably reclassified your overtime status because it discovered that you were previously misclassified. You may be entitled to recover your unpaid overtime wages going back two or three years prior to the reclassification.

5. Calculating Overtime
What is “Chinese Overtime”?

Please see above, under FAQ 1.

I am only paid 1/2 of my regular rate for overtime and sometimes even less. Is this right?

You may be being paid under the fluctuating workweek method. This is the method that some companies in the past used to refer to informally as “Chinese overtime”. The regular rate of an employee will vary from week to week. The regular rate is obtained for each week by dividing the salary by the number of hours worked in the week and cannot be less than the applicable minimum wage in any week. Since straight-time compensation has already been paid, the employee must receive additional overtime pay for each overtime hour worked in the week at not less than one-half this regular rate.

For example, if an employee is paid a salary of $500.00 per week on a fluctuating workweek basis and works 45 hours one week, their overtime pay is calculated as follows: $500/45 hours = $11.11 regular rate. Since their salary covers all hours worked at straight time, they are due half-time pay for hours worked over 40: $11.11 / 2 = $5.56 x 5 hours = $27.78.

To use this method:

  • the employee must have a work schedule with fluctuating hours, i.e., not be on a fixed schedule,
  • and must be paid a fixed salary that is meant to be straight-time compensation for all hours worked in a workweek, whether the employee works less than or more than 40 hours per week.
  • With almost no exceptions, no reduction in the salary may be made for short workweeks. In addition, the salary must be large enough to ensure that the regular rate will never drop below minimum wage.
I am paid a day rate. How should my overtime be calculated?

An employee may be paid a flat sum for a day’s work or for doing a particular job, without regard to the number of hours worked in the day or at the job, and receive no other form of compensation. Day Rate Pay is common in oil and gas drilling, refineries, inspections, disaster response and clean-up, and other similar jobs. In such a case the employee’s regular rate is found by totaling all the sums received at such day rates or job rates in the workweek and dividing by the total hours actually worked. The employee is then entitled to extra half-time pay at this rate for all hours worked over 40 in the workweek because the day rate is deemed to compensate for all hours worked at straight time.

For example, assume you are paid $250 per day and work 5 days during the workweek for a total of 45 hours. To calculate your overtime pay, you first add up all of your earnings for the week: $150 x 5 = $750. Then you divide that amount by the total hours worked to get your regular hourly rate: $750 / 45 = $16.67. You are entitled to half this hourly rate for all hours worked over 40: 5 hours x $16.67 x .5 = $41.66. So your total compensation for the week should be: $750 + $41.67 = $791.67.

What if I am a salaried non-exempt employee? How is overtime calculated?

A non-exempt salaried employee is an employee who is paid a salary but is still subject to the minimum wage and overtime laws; i.e., is not exempt. These employees must be paid overtime even though they are paid on a salary basis.

For example, if an employee is hired to work a 45 hour workweek for a weekly salary of $500, the regular rate is calculated as follows: $500/45 hours = $11.11. Because the salary is deemed to compensate the employee at straight time for all hours worked, the employee is due half-time pay for hours worked over 40: $11.11/2 x 5 hours of overtime = $27.77.

What if I work 2 different jobs at different pay rates?

According to the U.S. Department of Labor, when an employee (in a single workweek) performs 2 or more different types of work with different straight-time rates, the regular rate for that week is the weighted average of the pay rates. That is, the earnings from all hourly rates are added together and the total is then divided by the total number of hours worked at all jobs. In addition, the FLSA allows, under certain conditions, the computation of overtime pay based on one and one-half times the hourly rate in effect when the overtime work is performed.

What this means is that employers must pay overtime to nonexempt employees for all hours worked over 40 in a single workweek, even if the employee is working two separate jobs at the same company.

Examples of how overtime may be calculated:

Weighted average of the different rates. The regular rate of an employee who works 35 hours per week at $15 per hour as a machine operator ($525), and works 10 hours that same week at $7 per hour cutting the grass outside the plant ($70), is $595 divided by 45 hours, or $13.22 per hour. Thus, the overtime rate for this employee is one and one-half times $13.22, or $19.83 per hour, regardless of which job the employee performs during the extra hours.

Alternatively, if employer and employee agree, before the work is performed, that the overtime rate will be based on the regular rate that applies to the type of work performed during the hours in excess of forty. Therefore, if an employee spends 35 hours in a week working as a machine operator at $15 per hour, and five hours a week cutting the grass at $7 per hour, the overtime rate for any additional hours spent cutting the grass is $10.50 per hour. Conversely, the overtime rate for any additional hours spent working as a machine operator is $22.50.

Should bonuses be included when calculating my overtime?

In most cases – Yes. Unless your bonus is completely discretionary on the part of your employer, it must be included in determining your “regular rate” of pay. If your bonus is tied to achieving certain preset goals, quotas or other requirements, it is not considered to be discretionary.

6. Pay Periods & Overtime
How do pay periods affect overtime pay?

Pay periods do not affect the calculation of overtime. Overtime is calculated based on a workweek. A workweek is a 7 day period that your employer establishes and it must remain consistent. The workweek can start on any day of the week. For example, your employer may establish that the workweek runs from Monday through Sunday or from Wednesday to Tuesday.

If the pay period ends during a workweek, this does NOT affect the calculation of overtime. You continue to count your work hours through the end of the workweek to determine how much overtime you may be due.

Example: Assume your employer’s workweek runs from Monday to Sunday. You work 6 days in a row from Tuesday through Sunday, 8 hours per day, for a total of 48 hours. The pay period ends on Friday. The 32 hours you worked from Tuesday through Friday should be on your paycheck but this does not mean you stop counting your hours worked for the week for overtime purposes. Your next check should include the remaining 16 hours you worked that workweek (Saturday & Sunday) PLUS overtime pay for 8 hours because you worked a total of 48 hours for the workweek.

Your employer may change when their workweek starts but the change cannot be made to avoid paying overtime.

I work more than 80 hours in a pay period but I still don’t get overtime pay.

Chances are you are being paid twice a month (semi-monthly) instead of every two weeks (bi-weekly).

Per the labor laws, overtime is calculated based on a workweek – not the pay period. Covered, non-exempt employees are entitled to overtime pay for all hours worked over 40 during a work week. A workweek is a 7 day period established by your employer. It can start on any day of the week. For example, your employer’s workweek may run from Monday through Sunday or it may run from Wednesday through the following Tuesday. In order to determine your overtime hours, you must know when your employer’s workweek starts.

Your work schedule does not determine the workweek. For example, assume your employer’s workweek runs from Monday through Sunday and you work from Thursday through the following Tuesday. To determine your overtime hours, you would total the hours worked from Thursday through Sunday, when the workweek ends. If the hours worked from Thursday through Sunday total more than 40, you will be entitled to overtime for that week. On Monday, a new workweek starts so the hours you work on Monday and Tuesday count towards the new week’s total hours.

If you are paid twice a month, your pay period will usually include 2 full workweeks plus a few days of a third workweek. The hours worked during the third workweek would be considered regular time – assuming you do not work more than 40 hours during those few days. This means your regular time for the pay period could exceed 80 hours. For example, if you work 40 hours the first workweek, 40 hours the second workweek, and 8 hours for one day of the third work, your total hours for the pay period will be 88 hours but since you have not worked more than 40 hours in a workweek, under the labor laws, overtime pay is not due.

In short, in order to determine the overtime hours you are due in a given pay period, you must add up the overtime hours for each work week that ends during the pay period.

7. Overtime Law & Definitions
What is the FLSA?

The FLSA is a very broad federal labor law that dates back to the Roosevelt Administration. Among its provisions, it contains the legal minimum wage provisions, establishes record keeping and child labor standards, and requires that most employees be paid time and one-half for all overtime “hours worked.”

What is ‘work’?

Work time under the FLSA includes nearly all time spent performing job-related activities. These can include activities performed while “off-the-clock”, at the job site or elsewhere, whether voluntary or not. Work can include “off-the-clock” time spent maintaining equipment, cleaning up, staying late after normal shifts without “putting in” for overtime, doing job-related paperwork at home, making and responding to job-related telephone calls, working through meals, and many other activities.

What is ‘overtime’?

The word overtime is defined under the FLSA, and, in most cases, means all time actually worked in excess of 40 hours per workweek.

What is a ‘workweek’?

The term “workweek” means a period of 168 hours during 7 consecutive 24-hour periods – a 7 consecutive day period. A workweek can begin on any day of the week chosen by the employer, and each workweek stands alone; therefore, an employer cannot average 2 or more workweeks when calculating overtime. If an employee works more than 40 hours in any 1 workweek, regardless of how many hours were worked in the prior or following workweek, they are entitled to overtime pay for those hours.

What is the FLSA overtime rate?

Time and one-half the “regular hourly rate.” If an employee’s regular pay is not expressed as an “hourly” rate, their regular pay rate must be converted to an hourly equivalent.

The Department of Labor provides the following examples that are based on a 40-hour workweek:

Hourly rate – (regular pay rate for an employee paid by the hour). If more than 40 hours are worked, at least one and one-half times the regular rate for each hour over 40 is due.

Example: An employee paid $8.00 an hour works 44 hours in a workweek. The employee is entitled to at least one and one-half times $8.00, or $12.00, for each hour over 40. Pay for the week would be $320 for the first 40 hours, plus $48.00 for the four hours of overtime-a total of $368.00.

Piece rate – The regular rate of pay for an employee paid on a piecework basis is obtained by dividing the total weekly earnings by the total number of hours worked in that week. The employee is entitled to an additional one-half times this regular rate for each hour over 40, plus the full piecework earnings.

Example: An employee paid on a piecework basis works 45 hours in a week and earns $315. The regular rate of pay for that week is $315 divided by 45, or $7.00 an hour. In addition to the straight-time pay, the employee is also entitled to $3.50 (half the regular rate) for each hour over 40 – an additional $17.50 for the 5 overtime hours – for a total of $332.50.

Another way to compensate pieceworkers for overtime, if agreed to before the work is performed, is to pay one and one-half times the piece rate for each piece produced during the overtime hours. The piece rate must be the one actually paid during non-overtime hours and must be enough to yield at least the minimum wage per hour.

Salary – the regular rate for an employee paid a salary for a regular or specified number of hours a week is obtained by dividing the salary by the number of hours for which the salary is intended to compensate.

If, under the employment agreement, a salary sufficient to meet the minimum wage requirement in every workweek is paid as straight time for whatever number of hours are worked in a workweek, the regular rate is obtained by dividing the salary by the number of hours worked each week. To illustrate, suppose an employee’s hours of work vary each week and the agreement with the employer is that the employee will be paid $420 a week for whatever number of hours of work are required. Under this agreement, the regular rate will vary in overtime weeks. If the employee works 50 hours, the regular rate is $8.40 ($420 divided by 50 hours). In addition to the salary, half the regular rate, or $4.20 is due for each of the 10 overtime hours, for a total of $462 for the week. If the employee works 60 hours, the regular rate is $7.00 ($420 divided by 60 hours). In that case, an additional $3.50 is due for each of the 20 overtime hours, for a total of $490 for the week.

In no case may the regular rate be less than the minimum wage required by FLSA.

If a salary is paid on other than a weekly basis, the weekly pay must be determined in order to compute the regular rate and overtime pay. If the salary is for a half month, it must be multiplied by 24 and the product divided by 52 weeks to get the weekly equivalent. A monthly salary should be multiplied by 12 and the product divided by 52.

What is the new minimum wage rate and when did it go into effect?

Workers who are covered by the FLSA are entitled to a minimum wage of not less than $7.25 per hour effective July 24, 2009. Prior to July 24, 2009, the minimum wage rate was $6.55 per hour.

8. Meal Periods / Rest Breaks
Which states have laws that require rest periods?

7 States have rest periods requirements: California, Colorado, Kentucky, Minnesota, Nevada, Oregon, and Washington.

Working in CA, am I entitled to a paid lunch and other breaks?

Yes. Under California state law, many workers are entitled to take uninterrupted half-hour lunch breaks and regular paid ten minute breaks during shifts of 3½ hours or more. California law provides that employees who are not permitted to take the meal and rest periods allowed under California Industrial Welfare Commission Wage Order No. 5 must be paid one additional hour of pay for each day that the rest periods are not permitted, and one additional hour of pay for each day that the thirty minute meal periods are not taken.

9. Overtime Claims / Cases
What can I do to protect my overtime rights?

You can file a complaint with the U.S. Department of Labor or hire an attorney to assist you and possibly file a private lawsuit. Private lawsuits are the way in which most employees recover unpaid overtime.

What about retaliation for making a claim for overtime?

The FLSA is aimed at protecting the rights of employees and forbids an employer from retaliating against an employee who files a complaint or participates in a legal action to collect overtime pay. An employer who “willfully” retaliates can be subject to a fine and even imprisonment.

How do I prove the amount of time I worked?

It is the employer’s obligation to maintain accurate and complete records of the time worked by employees. If an employer does not maintain proper records, the employee is entitled to recover based on good faith, reasonable and realistic estimates.

If I am successful, what will I receive?

When plaintiffs prevail, they are entitled to recover all unpaid overtime for two or sometimes three years prior to the filing of a lawsuit. In almost all cases, they are additionally entitled to an award of “liquidated damages” equal to the amount of the unpaid overtime. This means that a successful employee can recover two times the amount of unpaid overtime. A successful plaintiff can also be awarded attorney’s fees and expenses.

What are the time limits?

In most cases, a Plaintiff can recover unpaid overtime for work done for two (2) years prior to a lawsuit being filed. In some instances, unpaid overtime can be recovered for work done for three (3) years prior to a lawsuit being filed. It is important to know that only the filing of a lawsuit “stops the clock.” Complaining to your employer or the Department of Labor does not “toll” the FLSA statute of limitations.

How long does a case take?

While most cases settle prior to a trial, the process can take from several months to several years. There are many factors that impact the timing in an FLSA case, including where the case is filed, the amount of discovery and investigation required, the number of plaintiffs involved and the attitude of the parties.

How do the lawyers get paid?

While there is no “standard” arrangement, we handle overtime cases on a contingent fee basis. What this means is that clients pay nothing out of pocket and our fees will be calculated as a percentage of any recovery or judgment we obtain for the client(s). We will advance all expenses relating to the case. The federal overtime laws state that a successful claimant shall, in addition to any judgment, be entitled to an award of “a reasonable attorney’s fee to be paid by the defendant, and costs of the action.” It is this fee shifting feature of the law that allows private attorneys to take failure to pay overtime claims that might not otherwise be economically feasible, given the time and expense involved in pursuing smaller claims. What this means is that a worker or small group of workers are able to access attorneys who are expert in handling overtime claims, even though the dollar amount of their claim(s) may be relatively small. Another great feature of this fee shifting law is that it is one-way. If workers file suit and win, they may have their attorneys fees paid by the other side, but the same does not apply if the defendant employer ends up winning the case.

Will I be taxed on my recovery?

Since you are recovering money that is owed to you for unpaid wages that would have been taxed had they been properly paid, the recovery will be taxed as income to you.

How do I get more information and answer to my questions?

Contact us and we can give you more information and review your specific circumstances. You can submit your information using the convenient online intake form, send an email or call.

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