When does an employer have to pay overtime? That’s a great question and the answer is, an employer has to pay overtime to certain kinds of workers, anytime they work more than 40 hours in any given work week. And, it’s important to stop right there because, a lot of people don’t understand exactly, when overtime cuts in. Some people think it’s more than eight hours a day. Some people think it’s more than 80 hours in a two-week pay period. And frankly, the way some companies pay their workers, add to this confusion because, it’s hard to read their pay stub so that you don’t know exactly what you’re getting paid for.
But, each week you analyze each week, separately. And, an employer can decide when their work week begins and when it ends. And some employers make that decision that it’s Monday through Sunday and they leave it that way for 100 years. Some employers change it frequently, and they can do that. But, they can’t change it to try to avoid paying overtime. So, you look at each week, and you say. “Did I work more than 40 hours in a given work week?” And if the answer is ‘yes’, then you are owed time and a half for every hour over 40 that you worked. And, the way you decide what the time and half is, is you take your regular rate … We could do a whole show just on the regular rate, and we may do that in the future. But basically, you’re regular rate is, what is your normal rate of pay? If you’re paid by the hour, say $10 an hour than that’s an easy calculus. You just take your regular rate of $10 an hour and you multiple by it by 1.5, which would give you an overtime rate of $15 an hour.
Sometimes, companies pay you additional compensation. Maybe a shift differential if you’re a nurse or, a bonus or commission and, all of that extra money is supposed to be calculated into your regular rate. So even though, your base rate may be $10 an hour, it may be that because, of these add ons, your regular rate should be calculated more like 15 or 20. And that’s on a case-by-case basis, and we have to look into that in every case to determine what the regular rate is. And then, you multiple by that by time and a half. For example, if your employer requires you to work 45 hours in a given week, but only pays you, your regular rate than, you don’t multiple it by 1.5. You multiple it just by .5 because, you’ve already been paid that straight time.
So, each case is different and each calculation is a little bit different. Now, this all presupposes that the worker in question is entitled to be paid overtime. And the way the law breaks that down … And right now, we’re talking about the Federal Law because, some state laws are different. For example, where I am in Tennessee, there really isn’t a state corollary to the Federal Law. In California and Missouri and some other states, they have their own overtime laws, which pay you a little bit better than the Federal Law, so you’ve got essentially, two claims. One state, one Federal. But, we’ll be talking about the Federal Law since that applies to everybody.
So, under the Federal Law, you have to determine whether or not the person is entitled overtime, and they call that either being exempt from overtime or not exempt, or non-exempt from overtime. I’ll be honest with you, when I first started doing this. I always had to catch myself because, that’s not the easiest thing to say. You have to think, “Okay. Exempt means this.” And so, if you’re exempt that means you don’t get overtime. If you’re non-exempt, that means you’re entitled to overtime.