You may be
required to pay your employees extra for any time worked over 40 hours in a
single workweek (recurring period of seven consecutive days). If a team member
works overtime, you must add that pay to their paycheck – you cannot give them compensatory time off
Labor Standards Act (FLSA) sets the federal rules about overtime pay. It doesn’t
require you to pay overtime rates if a team member works on a weekend or
holiday unless they’ve worked over 40 hours in the week. There’s also generally
no limit on the number of hours of overtime a person can accumulate, as long as
they’re older than 16.
What do I include when determining overtime hours?
calculating overtime, take all time spent on job-related activities into
account, whether the person is on-the-clock
On-the-clock is time spent on the business’s
premises, including breaks and nonproductive time. For example, if your
receptionist is reading a book while waiting for someone to enter, it’s still
considered work time. The only exemption here is meals. These are not generally
not included as long as the breaks are at least 30 minutes long and the team
member is relieved of all duties during the meal. This is true even if the
person must stay on the premises during their break.
Off-the-clock time includes working through lunches,
taking job-related calls at home, or taking tasks home with them. Commuting to the
office is only considered work time if the employee receives a phone call
during their drive or otherwise performs job-related duties. If the worker visits
multiple job sites during the day, the trip from home to the first site and
from the last location back home are not considered work time. However, the
drive from one place to another is.
Do I have to pay all my employees for overtime worked?
workers are entitled to overtime pay when they work more than 40 hours in one
week, and most hourly team members are considered nonexempt.
however, are exempt from overtime payments. To be exempt, they must
be paid at least $23,660 per year, or $455 per week
be paid on a salary basis
perform exempt job duties, which include:
Executive – They must regularly supervise two or more employees and have management as a primary duty, including
Administrative – The team member must perform non-manual office work directly related to the management or general business operations of the company or its customers. They must be able to exercise independent judgment about significant matters.
Professional – The person must work in a learned position, which includes lawyers, doctors, nurses, teachers, accountants, engineers, and pharmacists. These jobs require education beyond high school and often beyond an undergraduate degree. Some creative professionals, such as actors, composters, cartoonists, and journalists, may also be considered exempt.
You can easily calculate your hourly workers’ overtime rates
by multiplying their hourly rate by 1.5. For example, if an employee makes $9
per hour, they’d make $13.50 per hour for any time worked over 40 hours in a
If a salaried staff member is nonexempt from overtime, you
have to take a few more steps to determine their overtime rate:
their annual wages by 52 to find out how much they make per week
their amount per week by the number of hours they typically work in a week to calculate
their hourly rate
their hourly rate by 1.5 to learn their overtime rate
For example, a salaried, full-time team member makes $20,000
per year and is not exempt from overtime.
$20,000 by 52 weeks to find their weekly rate of $384.62
$384.62 by 40 hours to learn their hourly rate is $9.62
Multiply $9.62 by 1.5 to determine that their
overtime rate is $14.42 per hour
To ensure you’re paying your staff correctly for all their time worked, including overtime, you must track their time accurately. Learn more about how Workful’s time tracking software can help.