If you are going to require or allow certain employees to work overtime, you need to know whether you are required to pay them overtime.
Employees covered by the Fair Labor Standards Act (FLSA) must receive overtime pay for hours worked in excess of 40 in a workweek of at least one and one-half times their regular rates of pay. Those employees include those who work full time for:
- A federal, state, or local government agency
- A hospital or other institution primarily engaged in the care of the sick, the aged, the mentally ill or the mentally disabled who live on the premises
- A pre-school; elementary or secondary school or institution of higher learning (e.g., college); or a school for mentally or physically handicapped or gifted children
- A company/organization with annual dollar volume of sales or receipts in the amount of $500,000 or more.
Employees that are not covered by the overtime rules established by the FLSA include:
- Commissioned sales employees of retail or service establishments if more than half their earnings come from commissions and the employee averages at least one and one-half times the minimum wage for each hour worked.
- Computer professionals who are paid at least $27.63 per hour.
- Drivers, driver's helpers, loaders and mechanics if employed by a motor carrier and if the employee's duties affect the safety of operation of the vehicles in transportation of passengers or property in interstate or foreign commerce.
- Farmworkers employed on small farms.
- Salesmen, partsmen and mechanics employed by automobile dealerships.
- Employees employed by certain seasonal and recreational establishments.
- Executive, administrative, professional and outside sales employees who are paid on a salary basis.
Those employees who are eligible, not exempt, must receive overtime pay for hours worked in excess of 40 in a workweek at a rate not less than time and a half based on their regular rates of pay. In other words, the overtime premium rate is 50% of the employee's usual hourly wage, so "time and a half" means the employee's usual hourly wage plus the 50% overtime premium must be paid for every overtime hour worked.
The FLSA does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, unless the number of hours worked on such days go into overtime. But extra pay for working weekends or nights is a matter of agreement between the employer and the employee (or the employee's representative).
If you want to avoid facing questions from the IRS as to whether you’re paying the right employees the right amount, consider working with a payroll processing company like Complete Payroll. We work with many different types of companies in New York State to make sure their payroll is compliant.
