What is Overtime?
Simply put, overtime pay is an extra amount that employers must pay employees who work more than 40 hours per week. Overtime pay is regulated by the Wage and Hour Division of the U.S. Labor Department under the Fair Labor Standards Act. Employers who fail to pay appropriate overtime pay can face civil and even criminal liability.
The Overtime Formula
The general overtime formula is (hourly pay) x 1.5 x (number of overtime hours worked in a particular week). If an employee is paid $20 per hour, for example, his overtime pay rate would be $30 per hour. A workweek of 55 hours would entitle him to 15 hours of overtime pay, or $450.
Complications and Limitations
- The method of calculation varies under certain circumstances, such as when the employee’s pay is based on a monthly salary.
- Employers do not have to pay overtime for employees who work nights, weekends or holidays, unless they voluntarily agree with the employee to do so or the employee’s night/holiday/weekend work happens to exceed 40 hours per week.
- Employers must calculate overtime pay on a week-to-week basis, meaning each week must be calculated separately for overtime purposes. An employer may not offset a workweek of under-40 hours against an overtime workweek to reduce the amount of overtime pay due to the employee.
- An employer and an employee are free to calculate the employee’s pay based on criteria other than wages or salary, such as sales commission or per-piece rate. Nevertheless, overtime compensation must be calculated based on the income derived from work activities divided by the actual number of hours worked – which means that the employer must keep track of the employee’s hours even if the employee is not being paid by the hour.
- An employer may also hire an employee to do more than one kind of work at more than one rate of remuneration. In this case, overtime pay is based in the weighted average of the various rates of pay.
The Fair Labor Standards Act exempts certain types of employees from the overtime pay rule. Exemptions are generally limited to salaried white-collar employees who are paid at least $455 a week and who perform certain kinds of work. Which employees are exempt and which are not depends on the nature of their job duties, not their job title. Exempt employees include executives, administrative personnel, professionals, certain computer employees and outside sales staff.
Independent contractors are not considered employees and are not subject to an overtime requirement. Whether or not a worker is an independent contractor is determined on a case-by-case basis. This determination depends on several factors, all of which involve the degree of independence of the worker from the party who pays him.
Contact the Law Office of Zinda Law Group Today
If you are involved in an overtime pay dispute, or if you simply need to learn more about your legal risks in this area, it is important that you contact the right law firm. Zinda Law Group stands at the top of the legal profession in the Austin area, and we have been approved by the Better Business Bureau®. Our firm includes a number of attorneys with rich experience in employment law matters, and they will fight for your rights with aggressiveness, fearlessness and dogged persistence. If you are located in Austin, if you are considering filing a lawsuit against someone in Austin, or if you are involved in an Austin-based dispute, call us any time 800-863-5312 for a free initial legal consultation.