Overtime is a form of premium pay for work done in addition to the normal 40 hours per week. In most cases, overtime is paid at one-and-a-half times the worker’s hourly rate. It is designed to provide employees with more compensation for their time and compensate them fairly when they have extra responsibilities that need to be completed.
In this blog post, we will discuss what overtime pay is, who qualifies for it, and how much an employee can expect to make if their employer offers this benefit. We will also talk about the types of overtime pay and what happens if an employer refuses to pay overtime.
What is Overtime Pay?
While overtime pay isn’t necessarily desirable for either employer or an employee, there are times when it is needed, especially in businesses that are working with limited staff or an unlimited amount of work.
Overtime pay is the compensation an employee receives for working beyond their standard working hours. For instance, if an employee is eligible to receive overtime pay and their standard workweek is 40 hours, working 55 hours in a given week means they will earn overtime pay for those extra 15 hours.
What is the Purpose of Overtime Pay?
The purpose of overtime pay is to provide employees with more compensation for their time and compensate them fairly when they have extra responsibilities that need to be completed. Overtime pay is designed to protect both employers and workers through fair wages, consistent work hours, and a productive workforce. It also ensures job security by providing benefits such as health insurance or 401K plans. These benefits would not be available to employees who did not work the required 40 hours each week.
The federal overtime provisions are included in the Fair Labor Standards Act (FLSA). The FLSA requires that all employees covered by the Act must receive their overtime pay for hours worked over the standard 40 hours in a workweek unless they are exempt. There is no limit in the FLSA on the number of hours employees older than 16 years can work in any workweek. The FLSA also does not require overtime pay for work on regular days of rest, typically Saturday and Sunday or holidays, unless overtime is worked on those days.
How Does It Work?
The FLSA applies on a workweek basis. Usually, an employee’s workweek is a fixed and regularly cyclical period of 168 hours, which are seven consecutive 24-hour periods. The workweek doesn’t have to coincide with the calendar week, and it can begin on any day and at any hour of the day. Companies and businesses can establish different workweeks for different employees or groups of employees. However, averaging work hours for two or more weeks is not permitted.
Typically, overtime wage earned in a specific workweek has to be paid on the regular payday for the pay period in which the salary was earned. Nevertheless, in May of 2020, the Department of Labor announced their final rule, which allows employers to pay bonuses, overtime, and other incentive-based pay to salaried, non-exempt employees whose work hours vary from week to week. This rule now clarifies that payments, in addition to the fixed wages, are compatible with the use of the fluctuating workweek system under the Fair Labor Standards Act.
According to the Department of Labor (DOL), as of January 2020, all employees who earn less than $684 per week or $35,568 in a year have the right to federal overtime protection, even when they are considered exempt.
Who Can Receive Overtime Pay?
The Fair Labor Standards Act requires that employers properly classify their employees as either exempt or non-exempt. According to the Act, only non-exempt employees can qualify for overtime pay.
Exempt employees are ‘exempt’ from receiving overtime pay from their employers, meaning they are not entitled to overtime per the FLSA. Exempt employees typically have professional, administrative, or executive positions. However, some types of exempt employees who are usually paid less may still qualify for overtime pay.
Naturally, non-exempt employees are those who can receive overtime payment, and that includes hourly workers, such as contractors, servers, or retail associates. Aside from the FLSA rules, overtime eligibility can also be subject to state regulations. In states where employees can be subject to federal and state overtime laws, an employee will receive overtime pay according to whichever has the higher amount.
What are the Different Types of Overtime Pay?
There are various types of overtime pay an hourly employee can earn. There are:
- Double-time pay – This refers to pay that is double the amount an employee usually receives for their regular hours of work. For instance, if they usually get paid 15$ per hour, double-time pay earns them 30$ for each overtime hour worked. They may receive double-time pay if they work on a federal holiday or just for working overtime. Contrary to regular overtime, the FLSA doesn’t have a specific requirement for double-time pay;
- Time-off in lieu (TOIL) – Instead of paying their employees for overtime, some employers will give their employees additional time off. Usually, an employer and employee will negotiate the specifics of this arrangement, such as how much time they can take off and when;
- Voluntary overtime – This is a type of overtime when an employer offers additional work, and the employee is free to accept or decline without penalty;
- Non-guaranteed overtime – This is overtime an employer doesn’t have to offer, but if they do, an employee is required to work those extra hours per terms in their employment contract;
- Mandatory overtime – This type of overtime is mandatory and includes provisions set in the terms and conditions of the employee contract. Compulsory overtime requires an employer to follow certain rules and regulations to stay compliant.
What is New York’s Overtime Minimum Pay?
As we established, overtime pay, also known as ‘time and a half pay,’ is money earned for work done over the standard 40 hours in a workweek. Overtime minimum pay in New York is $18,75 per hour, which is one and a half times the regular New York minimum salary of $12.50 per hour.
Overtime pay in New York is based on hours worked in a given workweek. Therefore, time-and-a-half, double time, or any other amount higher than the agreed rate is not required because an employee was performing work after eight hours of one day or working on the weekend. It is needed because he was working more than 40 hours of a single workweek, or 44 for ‘live in’ employees.
New York exempts salespeople, farmworkers, taxi drivers, babysitters, camp counselors, and college students from overtime law. There are some special overtime pay rules which apply for domestic workers, restaurant and hotel employees, non-profit employees, and employees working in the building services industry.
New York labor law also requires all employers to provide employees with written notice of their regular and overtime hourly pay rates at the time of their hiring. Additionally, employers need to get written notice from their employees that they have received and understood this notification.
Every employer should have a solid overtime pay policy, easily accessible to employees. An employer’s overtime policy must comply with all local, state, and federal laws and regulations. Since overtime regulations can look different from state to state, it is crucial that employers stay informed on any changes within the state in which they are operating.
An employer is also required by the Fair Labor Standards Act (FLSA) to maintain detailed and efficient records for both regular and overtime pay, which is not only required for compliance but can also be beneficial for their business. However, this doesn’t stop some employers from trying to avoid this obligation. They usually do this by persuading employees to waive their right to overtime pay, averaging their overtime hours over several weeks, or even straight-up refusing to pay workers for their overtime work. If this happens, every employee should know that there is a way to get their unpaid wages money back.
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.