Overtime Pay is receivable to employees for the additional work hours in a week, beyond the regular 40 hours. There are exemptions, and it costs over the usual hourly rate to the employers. The U.S. Labor Department raised the salary to $684 a week from 2020 beginning for the exempt employee, and they work under the term ‘bona fide.’ Exempt employee duties include managing two and more employees and having the authority to fire or hire employees.
Related Post: How to Monitor Employees’ Overtime?
10 Interesting things you should know about Overtime Pay rates in the USA
The overtime pay requires the business owners to determine an exempt or nonexempt category for employees. It is because the FLSA outlines the employers to classify, and if they fail to do so, it will result in costly penalties. It will account for the employee’s hire date as a penalty.
The business plan laws about paying overtime vary from state to state. It is about to exempt versus nonexempt status. It follows the specific requirements of the state. Federal rules about overtime are as per employee classification.
The FLSA requires paying overtime to employees unless exempt employees from working beyond 40 hours a week. The wages for overtime should be one and a half times their regular pay rate.
Also Read: How Does Venture Capital Due Diligence Process Look Like?
There are no limitations on the employee’s working hours. Only less than 16 individuals or jobs highlighting safety put limits on work time. It means they cannot work beyond the regular work hours.
Roles include administrative, executive, commission-based sales or marketing jobs, and other professional roles that fall under exempt employees. It is the duty of an employee than their title that explains the exemption. This networking excludes even a few computer employees from receiving overtime.
Failing to pay overtime may open lawsuits from former and current employees. It will make you, the employer, to be liable for all the overtime unpaid. The Labor wage Department keeps investigating companies violating the laws of overtime.
Employers failing must retro-pay back wages owed to the employees affected. Here the employer also has to bear the penalty as liquidated damages. It is the amount calculated as the back owed wages.
Failure to comply with FLSA, costs 200% over than paying overtime. Violations appearing on purpose to be committed will result in up to $10,000 in fines. There is also an imprisonment threat if there is a repeat offense or negligence by the business owner. As a risk management, employers should pay overtime on time.
Also Read: Planning for the Inevitable: Americans’ Thoughts on Death and Business Succession
Organizations or businesses should perform yearly once an FLSA audit to ascertain their compliance with FLSA regulations.
FLSA orders business plans to give overtime only to nonexempt employees. On exceeding the entire week’s threshold of 40 hours, every employee receives overtime pay. However, some states ask paying overtime daily as the employee works 24 hours for over eight hours.
Overtime pay calculation
The overtime pay is compensation that is 1.5 times at least the regular pay rate of the employees. The overtime work has no maximum amount. Businesses are offering double or higher pay as overtime.
Using the thumb rule of time-and-a-half, the overtime pay for an employee working for 45 hours a week at $15/hour will be:
40(hours) x $15 + 15 x 1.5 x5(hours) = $600 + $125= $725 as total.
This equation applies only to nonexempt employees. The week’s pay in total, and the overtime pay, in addition, are subjected to tax at regular rates.