What Overtime Pay Is and How to Calculate it

This allows employees to plan their work/life balance ahead of time and prevents last-minute scrambling. These are all important factors to keep in mind before implementing an overtime policy. This way, they can start and finish their workday at a time that works best for them. Just be sure to set clear guidelines so everyone is on the same page. It might seem counterintuitive, but employees who take regular breaks are actually more productive than those who don’t. There are countless studies that have been conducted in order to show whether or not working overtime is good for productivity. The results, however, are all over the place and it’s hard to say for sure if it helps or hinders a business.

Overtime Pay Based on Company Policies and AgreementsEven if you are not legally entitled to overtime pay under state or federal law, some companies have more generous policies. Likewise, employees may be entitled to be paid extra for their overtime hours based on their employment contracts or offer letters. Salaried Employees Can Be Entitled to Overtime PayMany employees believe they are not entitled to overtime pay simply because they are paid a salary rather than by the hour. In California, based on California Labor Code 1171, only an employment relationship is required for overtime rules to apply. On August 23, 2004, President George W. Bush and the Department of Labor proposed changes to regulations governing implementation of the law.

Overtime Rule Changes that Apply to Maine Employers

For more information on how how to calculate overtime pay docking affects an employer’s obligation to pay overtime, see Nolo’s article Legal Limits on Pay Docking and Unpaid Suspensions. Even if your business is so small or local that it isn’t covered by the FLSA , you might be covered by your state’s overtime law. They are specifically exempted from overtime by the provisions of the California Labor Code or one of the Industrial Welfare Commission Wage Orders regulating wages, hours and working conditions. Believe it or not, having employees submit proper timesheets is easier said than done. While some employees might feel guilty for exceeding their standard number of hours, Forbes found 89 percent of employees waste time at work, which can add to an employer’s bottom line.

In the case of overtime, a workweek is defined as a recurring period of 168 hours, or seven 24-hour days. Employees can keep track of their overtime pay by physically clocking in and out of the office, writing their hours down, or keeping a digital time card. Note that certain states have different methods for calculating the regular rate of pay for nonexempt employees who are paid on a salary basis. When a bonus is considered part of an employee’s regular rate of pay, no difficulty arises in computing overtime compensation if the bonus covers only one weekly pay period. For instance, some companies voluntarily agree to pay their hourly employees time-and-a-half before they have worked 40 hours per week, or for working on holidays or weekends. Other companies count paid breaks toward their hours worked when calculating overtime pay, even though the law does not require them to do so.

Employee who does not work more than 40 hours in a workweek

An on-call employee who is not required to be at the work site, and who is effectively free to use his or her time for his or her own purposes, is not working while on call and need not be paid. Of course, if the employee is paged and must perform work, the employee must be paid for all hours worked. Effective July 1, 2015, the Attorney General’s Office will enforce an earned sick time for employees law requiring sick leave under certain conditions. Guidance regarding the requirements of this earned sick time law can be found in this notice. Any employer, public or private sector, may allow a worker to adjust or flex his or her schedule within the work week so as not to go over 40 hours.