The Fair Labor Standards Act has been around since 1938. Regardless, thousands of employers fail to comply (either knowingly or unknowingly) with the FLSA overtime rules. Some violators are well-known multi-million dollar corporations.
When is overtime pay mandatory?
Employers must pay overtime when hours worked by a non-exempt hourly worker exceed 40 in a defined work week. The overtime pay rate under the Fair Labor Standards Act (FLSA) must be at least time and one-half the employee’s regular rate of pay. No limit is imposed on the number of hours worked in a workweek for those over age 16. Overtime pay is not required for work on weekends, holidays or regular days of rest, unless the employee has exceeded the overtime hours limit in the workweek. State, local, union and industry-specific laws may also apply.
Case Studies
Overtime violations usually result from either misclassifying non-exempt employees or failing to track all employee time.
A Las Vegas plastering company had to pay $137,174 in back wages owed to 156 piece-rate employees who weren’t paid overtime.
https://www.dol.gov/newsroom/releases/whd/whd20210319
An Ohio-based home health agency was fined $327,848 for multiple violations including not paying overtime when travel time between clients pushed aides over a 40-hour workweek.
https://www.dol.gov/newsroom/releases/whd/whd20210316-0
The first line of defense against overtime violations is to track all employee time for every shift!
In addition:
- Make sure overtime-exempt employees meet FLSA duties test
- Make sure independent contractors meet the IRS criteria
- Don’t require off-the-clock work
- Know overtime laws regarding piece-rate work
- Know tip laws
- Compensate correctly for “call-in” shifts or “on-call” work
- Know meals/breaks laws
- Pay employees for training time, putting on uniforms and traveling between job sites throughout the day (traveling from home to the first job site or client is not generally compensable time)
Unplanned Overtime Costs You Big Time
While we’re on the subject of overtime, it’s worth pointing out how unplanned overtime impacts your labor budget. A recent Deloitte study of over 800 U.S. employers revealed an average of 31 unplanned overtime hours each week, per company. Let’s do the math: if your company has an overtime wage of $25, 31 hours a week would add up to a yearly cost of over $40,000.
By limiting unplanned overtime, you not only reduce the risk of a violation, but also save your labor budget.
Automated Time and Attendance Works Overtime to Keep You Compliant
Automated time and attendance can help you track employee time and provides alerts and notifications when an employee is approaching overtime status. With automation in place, you have more control over your budget and all the right information for an accurate audit.
Automated time and attendance provides the following tools for overtime compliance:
- Alerts for overtime hours thresholds
- Meal/break early punch lockout
- Overtime calculation by job code
- Tip reporting
- Flexible scripting for state or local overtime laws
- Audit-ready recordkeeping and reporting
- Mobile location management
Call 941 Payroll today at (877) 941-9419.
