Definitions of Key Overtime Law Terms |

Definitions of Key Overtime Law Terms

We understand that most people did not go to law school, so they may have a limited understanding of overtime law terms. This is why we have created this resource to provide our clients with some of the key overtime law terms they should know when trying to determine if they have a case. This is in addition to the resource we created where we answered some common questions you might have about overtime pay.  And as always, if you feel you’re entitled to overtime pay that you didn’t receive, contact us today to receive a free evaluation from one of our overtime lawyers.

Exempt – Job positions that are NOT entitled to overtime pay are “Exempt” from the overtime pay laws. What Types of Employees Are Entitled to Overtime Pay

Non-exempt – Job positions that ARE entitled to overtime pay are “Non-Exempt” and the overtime pay laws apply to them.

Overtime – Hours worked over 40 in a Workweek (see definition of Workweek below).  Some states have daily overtime for hours worked over 8 or 12 in a single day (e.g., California).

Workweek – A Workweek is a fixed and regularly recurring period of 168 hours, or seven consecutive 24-hour periods.  The employer establishes their own workweek and they can set it to begin on any day of the week and at any hour of the day.  A workweek is not any 7 consecutive days that an employee works.  It is also not the same as the pay period and does not have to coincide with the start or end of the pay period. What is a Work Week?

Example:  If an employer’s workweek starts on Monday at 12:00 am, the workweek would end the following Sunday at 11:59 pm.

Overtime Pay – Time and one-half the Regular Rate of Pay for any hours over 40 in a Workweek.    Example:  If the employee is paid $15/hour and works 45 hours in the workweek, the overtime pay due is calculated like this:  $15 x 1.5 x 5 hours = $112.50. Overtime Calculator

Regular Rate of Pay – The regular rate of pay is an hourly rate.  If an employee is not paid on an hourly basis, their regular pay rate must be converted to an hourly equivalent.  The regular hourly rate is determined by dividing an employee’s total earnings for any workweek by the total number of hours actually worked in that workweek.  What is the FLSA Overtime Rate?

Example:  If an employee is paid on a day rate basis, the regular hourly rate is determined by adding all of their day rates earnings for the week and dividing by the total works hours for the week.  If the employee’s day rate is $200/day and they work a total of 5 days and 50 hours for the week, the regular hourly rate would be $20/hour ($200 x 5 days / 50 hours).

Hours Worked – Hours worked ordinarily include all the time during which an employee is required to be on the employer’s premises, on duty, or at a prescribed workplace.  It does not, however, include hours not actually worked such as paid vacation time or PTO.

Salary Basis – Salary basis means an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. The “salary” amount cannot be reduced because of variations in the quality or quantity of the employee’s work. In general (there are exceptions), an exempt employee must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked. Exempt employees do not need to be paid for any workweek in which they perform no work. If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.

Chinese Overtime / Fluctuating Workweek – If an employee is paid a fixed salary each workweek for hours that vary from week to week, the employer may use an overtime calculation method called “fixed salary for fluctuating workweeks”. This is the method has been commonly referred to as “Chinese overtime”. What is Chinese Overtime?

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