Overtime pay rules are governed by the Fair Labor Standards Act (FLSA). Overtime pay is based on a 40-hour workweek and overtime pay for eligible employees is required for any hours worked over those 40 hours.
How Overtime Pay is Calculated
Overtime pay is not automatically awarded for work completed on Saturdays, Sundays, holidays, or regular days of rest unless hours worked on those days push the weekly total over 40 hours.
All non-exempt employees who work over 40 hours during a workweek must be paid at a rate of at least one and one-half times (typically referred to as time and a half) the employee's regular hourly rate. So a worker earning $10 per hour, who worked a 50-hour week would be entitled to 10 overtime hours at $15 per hour.
Overtime pay applies to non-exempt salaried employees as well as hourly employees. For example, a salaried employee who is paid $600 per week would be guaranteed at least $22.50 per hour for each hour worked over 40 ($600/40 = 15 X 1.5 = $22.5 per overtime hour).
Under the Fair Labor Standards Act, an employee's workweek is a "fixed and regularly recurring period of 168 hours - seven consecutive 24-hour periods." The workweek can start on any day or time as long as the hours are consistently calculated for that same period. Hours can't be averaged over a two or four-week pay period. The Act does permit employers to designate a different workweek for different classes of employees.
Hospitals and residential care facilities are allowed to calculate overtime based on a period of 14 consecutive days instead of the otherwise required adherence to a seven consecutive day period. For example, a hospital employee might work 30 hours in week one of the period and 50 hours in week two of the period for a total of 80 hours. This worker would not be entitled to any overtime since she did not average more than 40 hours per week.
Non-exempt employees can be paid on a weekly, bi-weekly, semi-monthly, or monthly basis, and overtime is normally paid during the period that it was earned.
Employees Not Entitled to Overtime
Some employees, known as exempt employees are not entitled to overtime pay. To be classified as exempt, a worker must be earning over $455 per week. The rules under the Fair Labor Standards Act also have overtime exemptions for "highly compensated" employees who customarily and regularly perform any one or more of the exempt duties or responsibilities of an executive, administrative, or professional employee.
Many other categories of workers are exempt from overtime pay such as taxicab drivers, truck drivers, salespeople, radio and television station employees in small markets, motion picture theater employees, sugar processing workers, and seamen.
Increases in Overtime Pay Standards
President Obama issued a directive in 2014 for the Department of Labor to review the threshold under which all workers would be designated as non-exempt. The DOL has issued a finding establishing $940 per week as the new threshold. Beginning in 2016, all workers earning less than that figure would likely be entitled to overtime pay.
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