What the New Overtime Rule Means for Workers U S. Department of Labor Blog

Standard pay can be calculated by multiplying the normal pay rate by the number of hours that you normally work in a week. From overtime and bonuses to paying and filing taxes, payroll can be a hassle. The important thing to remember is that you stay on top of your various payroll responsibilities in real time. That way, no How To Calculate Overtime Pay matter which tricky overtime pay calculations you have to deal with, you can avoid serious mistakes, like underpaying employees or failing to follow your state’s laws. The Fair Labor Standards Act (FLSA) makes it a requirement to pay overtime to non-exempt employees, although there are some exceptions for exempt employees.

What is Overtime Rate?

As we mentioned above, overtime pay is a legal requirement of the FSLA for all non-exempt workers in the US. However, not all employees in the US are entitled to this form of compensation for additional hours worked. Specifically, employees who are exempt from the requirements of the FSLA are not legally entitled to overtime pay. This is because they are classed as salaried workers rather than hourly workers. In other words, their employer pays them a fixed amount each month regardless of how many hours they work. Overtime pay for remote employees follows the same rules as in-office workers.

What are the penalties for failing to pay overtime?

Under the FLSA, any travel away from home for work purposes during an employee’s workday is considered work time. An important distinction is that the travel from an employee’s home to the train station or airport is not considered work time, as it’s not so different from a regular commute. When sending an employee to a remote location for work, you must count the hours they traveled as part of their 40-hour workweek.

Why Some Employees Are Exempt From Overtime

• Employers with hourly wage earners need to know how to calculate overtime to ensure that they are paying employees the right amount and complying with the FLSA.
• As with other hourly employees, they are entitled to overtime pay and may be offered differential pay.
• Employees that are eligible for overtime pay and work more than 40 hours per week are still entitled to overtime pay compensation.
• Workers in the 19th century regularly worked roughly 100 hours per week.

The section was previously interpreted to mean that only an employee’s base salary, and not any additional regular payments they may receive, had to be increased by time-and-a-half or two times, as appropriate. 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. If you don’t pay overtime when it’s due, you could face back pay awards, fines, and lawsuits.

The right accounting software can facilitate the process of tracking and compensating overtime as well as other business expenses. Read our reviews of the best accounting software to find the right solution for your business. This comes out to about $684 per week or $17.10 per hour with a 40-hour weekly schedule.

How to Calculate Overtime

• The employee primarily performs executive, administrative or professional duties.
• Overtime pay protections in the Fair Labor Standards Act say almost all hourly workers qualify for 1.5 times their pay after 40 hours worked in a week.
• The FLSA does not require employers to pay overtime rates for hours worked during holidays, weekends or nights.
• So, if an employee worked 10 hours on Monday, 6 hours on Tuesday, and 8 hours on Wednesday, Thursday, and Friday, their employer wouldn’t owe them overtime pay.
• While it may be safe to assume salaried workers can’t collect overtime, Robert L. Föehl, business law and ethics professor at Ohio University, said that couldn’t be further from the truth.

Example 3: Employee with multiple pay rates

As a dollar amount per hour