Overtime: Who Is Eligible to Receive Overtime Pay?

Do Exceptions Exist to How Overtime Pay Is Handled?

Crew of railroad workers working overtime into the night.
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You've probably heard the term overtime pay, but you may not understand how you end up getting overtime pay, which is time and a half. Time and a half pay means that if your regular pay is $10 an hour when you work overtime, you receive $15 an hour. Here's what you need to know about overtime.

Who is not eligible for overtime?

Under the Fair Labor Standards Act (FLSA), employees are divided into two groups: Exempt and nonexempt employees. Exempt employees are salaried and do not receive any overtime pay, regardless of how many hours they work. To receive this classification, these employees' job responsibilities must meet strict standards, including management positions or professional work.

Exempt employees are responsible for the accomplishment of a whole job. The requirements of the job are most frequently learned and negotiated through goal setting, performance development planning, and the organization's performance management process. Their requirements fit within the strategic planning framework for the organization.

Who is eligible for overtime?

All other employees are classified as nonexempt which means that they are subject to the Fair Labor Standards Act and are eligible for overtime pay. Overtime pay begins when an employee works more than 40 hours in one workweek, and more than 8 hours in one day in some states (Alaska, California, Nevada, Puerto Rico, and the Virgin Islands) or 12 hours in Colorado, according to the Society of Human Resource Management. Stay in touch with the equivalent of the Department of Labor in your state or jurisdiction to make certain that your overtime decisions are lawful.

In all but these six jurisdictions, overtime is calculated only on a weekly basis. So, an employee who works 10 hours on Monday and seven hours a day for the next four days are not considered to have worked overtime for purposes of pay in states that keep the 40 hours standard.

Additionally, what is considered a workweek may be defined by the employer as any consecutive seven days, with each day consisting of a 24 hour time period. While most businesses operate on a calendar week, if a business wants to run Wednesday to Tuesday for their pay period, they can.

Can you waive your right to overtime pay?

The answer to this question is no. Let's take an extreme example. You work all day on a spreadsheet and neglect to save your work as you go along. At 4:30, a power outage occurs and you lose all of your work. This is clearly your fault and your boss is furious with you for not saving the spreadsheet.

The meeting is tomorrow morning at 8:00 a.m. In order to finish the document, you'll have to stay at least five hours late, putting your time at 45 hours for the week. Your company is still required to pay you overtime for those five hours, even though the reason for the overtime is 100% your fault. They can certainly fire you, but not until they've paid you.

What about comp time?

In the above scenario, one other option exists and that's comp time. If you stay five hours late on Thursday to finish the project, your boss can give you comp time in lieu of overtime as long as he does it in the same workweek. So, if you only work three hours on Friday, and your total hours don't go over 40, that is a possible solution to avoid the overtime payment.

What is not possible is that you work 45 hours in one workweek and only 35 hours in the next to avoid the overtime payment. That is illegal for private businesses. It doesn't matter if the employee consents to this handling of overtime hours or not. Under FLSA, manipulating hours to avoid paying for overtime is illegal.

Nonexempt employees cannot work for free either. They must be paid for all hours worked, regardless of whose idea it was to have the employee work extra hours. This is also why you need to exercise caution in any situation where you may have an hourly employee working remotely. They still need to record all hours worked and receive overtime pay for the hours worked in excess of the law.

Are there any exceptions to paying for overtime?

According to the Department of Labor (DOL), some exceptions to these overtime rules apply, under special circumstances, to police and firefighters and to employees of hospitals and nursing homes. If these jobs exist in your workplace, you will want to check further about overtime with the DOL.

All states are subject to the federal minimums, but your state may be more restrictive. If you're making decisions for your business, double-check with your employment attorney. You don't want to accidentally violate the FLSA regulations.

What about paying double time for overtime employees?

Double time pay is when an employer pays an employee twice their hourly rate of pay. For example, an employee who is typically paid $14 an hour is paid. $28 an hour. According to the DOL, employers have no requirement to pay double-time to employees. But, double-time may be negotiated in an employment contract.

State laws may require overtime or double-time pay, though. In California, for example, employers must pay double time for all hours worked over 12 in any workday. They must also pay double time for all hours worked over eight on the seventh consecutive day of work in a workweek. Check with your state DOL to understand the specific rules for your location.

However, certain instances exist where an employer might want to pay double-time pay as a goodwill gesture to employees. Two that immediately come to mind are when an employee works on a holiday or when an employee must miss a company-sponsored event because the employee has to work.

Overtime rules are fairly straightforward if you stay in touch with your state DOL to ensure that you are properly compensating your employees.

Disclaimer: Please note that the information provided, while authoritative, is not guaranteed for accuracy and legality. The site is read by a world-wide audience and ​employment laws and regulations vary from state to state and country to country. Please seek legal assistance, or assistance from State, Federal, or International governmental resources, to make certain your legal interpretation and decisions are correct for your location. This information is for guidance, ideas, and assistance.