How to Calculate Overtime

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, record keeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State and local governments. A firm can have an overtime policy that is more beneficial to an employee, but the FLSA defines what the minimum federal overtime regulations are.

What is Overtime Pay?

Overtime pay is premium pay that is one and one-half (1.5) times an employee's normal hourly pay rate, or more. Some states and companies have special overtime pay that is 2.0 times an employee's normal hourly pay rate. This is often called "double time" pay.

What are Some Common Overtime Exemptions?

Employers do not have to pay overtime wages to all types of employees. Read more about what types of employees are overtime exempt.

WorkWeek

A workweek is a fixed and regularly occuring period of 168 hours, or seven consecutive 24 hour periods. A workweek doesn't have to be a Sunday to Saturday work week. An employer can define a workweek to start on any day of the week that they want, and an employer can define the start of a work day at any time.

The start of a workweek can be changed, just so long as the change is intended to be permanent, and is not designed to get around overtime requirements.

Overtime Pay is based on a 40 Hour Workweek

Unless an employee is specifically exempted, according to the FLSA, overtime must be paid after an employee works 40 hours of work in a workweek.

In situations where an employee's shift spans two workweeks, the shift should be split at the end of the workweek, and overtime calculations should be done one workweek at a time.

For example, suppose that a company has established that the workweek for their employees goes from Midnight, Sunday morning, to Midnight Saturday night. If an employee were to start work at 8:00 PM on Saturday night, and continue working until 4:00 AM Sunday morning, that shift would be split at midnight. The four hours worked on Saturday would be considered for overtime in the first workweek, and the four hours worked on Sunday would start the workweek and would count toward overtime thresholds in the second workweek.

Page One: How to Calculate Overtime
Page Two: Bi-Weekly Payroll


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