One of the most often questions employees typically ask is how much they will be paid for their overtime work. The general answer is that it depends on several factors, such as what type of employee they are and what state and federal laws they are covered by. Additionally, there are some employees who can be exempt from overtime pay regulations and therefore cannot receive overtime pay.
The federal government, particularly the Department of Labor (DOL), requires that all employers pay their employees overtime wages if they have worked more than a specific number of hours in a week. And, as of January 1, 2020, even some salaried employees must be paid overtime. This article will discuss overtime pay and how every employer in New York should disburse it to their employees.
What is Overtime Pay?
Employees who work more than 40 hours per week are entitled to a higher pay rate for their additional work. This is called overtime pay, also known as overtime compensation. Federal and state overtime laws require employers to pay employees who work more than 40 hours a week at least one-and-a-half times the employee’s regular hourly rate of pay for the additional time they put in. For instance, if an employee makes $20 an hour, they would get 35$ for every hour of overtime they work. ‘Time-and-a-half’ is the minimum amount an employer has to pay for overtime work, but they also have the right to pay employees more than that if they choose.
Overtime compensation has been the law in the US workforce since the passage of the Department of Labor’s Fair Labor Standards Act in 1938. Although it initially ruled that overtime should start after an employee had worked 44 hours a week, the FLSA was modified two years later, lowering the threshold for overtime pay to 40 hours.
How Does it Work?
Per the FLSA directions, overtime begins when a non-exempt employee starts working over 40 hours in a week. It’s not important if an employee works more than eight hours a day, so long as they don’t go over the 40 hours limit for the entire week. However, some states will also require employers to pay daily overtime if their employees work more than eight hours in a 24-hour period.
Since the Fair Labor Standards Act defines a workweek as ‘any fixed and regularly recurring period of 168 hours/seven consecutive 24-hours periods’, overtime can run as long as an employer needs if they properly compensate workers for the additional time.
How Much is the Overtime Pay?
As federal and state law stipulates, overtime compensation is paid at a rate of at least one-and-a-half times the employee’s regular hourly rate of pay also known as time-and-a-half. There is no maximum amount that an employer can pay to compensate an employee for their overtime work, so companies sometimes offer double pay or higher for overtime work, usually when the shift being intended for overtime is particularly undesirable.
Using the one-and-a-half rule of thumb, an employer would calculate overtime pay by multiplying a worker’s hourly rate by 1.5 and then multiplying the result by the number of overtime hours they worked. This amount is then added to the amount an employee makes within a 40-hour workweek.
Here is an example – If an employee who makes 15$ per hour worked 45 hours in a workweek, the equation would go like this:
Employee’s regular pay rate: 40 hours x 15$ = 600$
Employee’s overtime pay: 15$ x 1.5 x 5 hours = 125$
Employee’s total pay for the workweek = 600$ + 125$ = 725$
This equation works regardless of how much overtime an employer offers their employees. It’s important to note that this equation only applies to non-exempt employees and that the total pay for the workweek, including the additional overtime payment, is subject to regular tax rates.
The Formula for Overtime Pay
There is a simple formula for calculating overtime pay. First of all, an employee must calculate their hourly overtime wage:
HOP (hourly overtime pay) = HRP (hourly regular pay) * m (multiplier, most often 1.5).
Once they know this value, an employee can calculate their total overtime pay:
OP (overtime pay) = HOP * n (the number of overtime hours in a month).
Finally, if they want to determine their total salary at the end of the month, an employee has to add it to their regular salary:
TP ( total pay) = OP + RP (regular pay).
Are Salaried Workers Entitled to Overtime Pay?
So far, we have established that overtime pay is received for the additional hourly work on top of the 40 work hours an employee has in a week. In other words, non-exempt workers are entitled to overtime pay. Salaried workers, however, are not paid by the hour. While many people assume that such workers aren’t able to collect overtime at all, that is not accurate.
It is important to understand that paying a salary for a job does not automatically exempt that employee from receiving overtime compensation under the Fair Labor Standards Act or New York Labor Law. The critical determination is whether the employee is exempt or non-exempt.
Overtime Pay Exemptions
According to the FLSA, exempt employees are not able to collect overtime pay if they are paid on a salary basis at not less than $684 per week and work as administrative, professional, and outside sales employees or bona fide executives. The Department of Labor also exempts system analysts, computer programmers, software engineers, and other similarly skilled workers in the computer field from overtime payments regulations.
The duties that make a worker exempt from overtime pay include managing two or more employees and having the authority to hire or fire employees. To check the full list of DOL’s exempt duties, click here.
What are the Penalties for Employers Who Fail to Pay Overtime?
Employers who violate overtime laws will have to pay any back wages owed to the affected workers, in addition to a ‘liquidated damages’ penalty of 100% of the underpayment. As a result, failure to comply with the FLSA rules can cost employers double the amount of just paying their employees overtime in the first place. Violations committed on purpose can also result in substantial fines and the threat of imprisonment if the employer is a repeat offender.
To recapitulate, overtime pay is the payment for hours an employee worked exceeding their standard scheduled work-time. The overtime starts when a non-exempt employee begins working over the standard 40 hours in a workweek. Per federal law, overtime is paid at a rate of at least one and a half times the worker’s regular pay rate. This way, an employer should calculate overtime by multiplying the worker’s hourly rate by 1.5 and then multiplying that result by the number of overtime hours they worked.
Unfortunately, there are some employers who will refuse to pay overtime despite the risk of costly litigations, ruinous fines, and possible jail time. Nevertheless, employees always have the option of getting back their unpaid wages.
To find out whether you have a case worth pursuing, feel free to contact Cilenti & Cooper today. We treat every case with the attention and care it deserves and can fight for your rights from beginning to end. We offer a free consultation to all of our prospective clients, so you have nothing to lose.