What You Need to Know About Overtime
If your employees work more than 40 hours per 7-day workweek they may be entitled to overtime pay. New overtime rules were set to take effect late in 2016. These regulations would have expanded the number of employees eligible to receive overtime pay but they are currently tied up in federal court. It is vital that you observe the current regulations to avoid potential fines or litigation. If you have questions about state or federal overtime rules, contact your LegalShield provider law firm.
- Current Rules - Federal overtime regulations are part of the Fair Labor Standards Act (FLSA). The FLSA entitles employees working more than 40 hours in a workweek to one and one-half times their regular pay rate. If your business has, “an annual gross volume of sales made or business done of $500,000 or more” you are required to pay overtime. All schools, hospitals, medical facilities and public agencies are required to pay overtime. Click here to determine whether FLSA applies to your business.
- State Regulations - Many states set additional rules for overtime pay. California, for example, requires overtime for those who work more than 8 hours in a day and double pay for those who work more than 12 hours in a day. Other states set specific thresholds for businesses that must comply with overtime rules. Arkansas requires employers with more than 4 employees to pay overtime. Click here to view a map highlighting current state overtime laws. It is important to understand both the federal and states regulations where you do business.
- Exempt Employees – There are exemptions for some executive, administrative, computer professionals and other professional service employees.
From the Department of Labor:
A. Currently, to qualify for exemption, a white-collar employeegenerally must:
- be salaried, meaning that they are paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the "salary basis test");
- be paid at least a specific salary threshold, which is $455 per week (the equivalent of $23,660 annually for a full-year employee) in existing regulations (the "salary level test"); and
- primarily perform executive, administrative, or professional duties, as provided in the Department's regulations (the "duties test").
Certain employees are not subject to either the salary basis or salary level tests (for example, doctors, teachers, and lawyers).
- New Rules from 2016 – Overtime exemption thresholds were set to nearly double in December of 2016; however, the new rule is currently tied up in court. There is a great deal of speculation about the fate of the new rule with many expecting a change in direction from the new administration. The U.S. House of Representatives recently passed a bill that would allow certain employers to offer comp time instead of overtime pay. The bill still must pass the Senate but it is yet another sign that changes are coming. It is important for all businesses to follow these changes carefully. If you have any questions, contact your LegalShield provider law firm.