what is flsa overtime?

Overtime pay for nonexempt employees is computed under the Fair Labor Standards Act (FLSA), subject to some special rules for Federal employees. Under the FLSA, overtime pay is determined by multiplying the employee’s “straight time rate of pay” by all overtime hours worked PLUS one-half of the employee’s “hourly regular rate of pay” times all overtime hours worked. All overtime work that is ordered or approved must be compensated. All overtime work that is “suffered or permitted” also must be compensated, except for flexible schedule employees. (See 5 CFR part 551.)

Include any applicable special rate supplement or locality payment in the “total remuneration” and “straight time rate of pay” when computing overtime pay under the FLSA. Compute the “hourly regular rate of pay” by dividing the “total remuneration” paid to an employee in the workweek by the number of hours in the workweek for which such compensation is paid.

The limitation on an hourly rate of overtime pay under title 5, United States Code, does not apply to overtime pay under the FLSA. Also, the maximum biweekly or annual earnings limitations on title 5 premium pay do not apply to FLSA overtime pay.

Multiply the straight time rate of pay by all overtime hours worked PLUS one-half of the employee’s hourly regular rate of pay times all overtime hours worked. (See 5 CFR part 551, subpart E.)

Follow the steps below to compute FLSA overtime pay. The example below is based on a GS-7, step 1, annual rate of basic pay of $46,696. (See Salary Table 2023-RUS.)

Total Hours of Work: 52 hours.Overtime Work: 12 hours.Nightwork: 40 hours.Sunday Work: 8 hours.

Complete Payroll Solutions’ compliance experts advise clients of all sizes on how to stay compliant with federal and state employment laws and regulations. One of the most common areas of confusion for our clients is correctly paying overtime.

Here, we’ll explain the requirements for overtime pay. After reading this, you’ll know the rules and how to ensure proper recordkeeping to get calculations right. This should help you avoid fines and allegations of improperly paid overtime.

The FLSA is a broad federal law that covers several areas of the employer/employee relationship. While the law contains many elements that employers need to be aware of, one of the areas that warrants special attention is the overtime pay rule.

More than 143 million American workers are protected by the FLSA so the law covers most employees — and likely yours. Specifically, the FLSA covers:

The FLSA requires that employees be paid at least one and a half times the regular wage rate for all hours worked over 40 in one workweek, which is defined as seven consecutive 24-hour periods.

You’re required to pay overtime during the payroll period in which the employee earned it. If you pay weekly, then it must be paid weekly. If your payroll is bi-weekly, then you’ll pay it bi-weekly, although the amount is still based on a 40-hour workweek.

You’re not required to pay exempt workers for any hours worked over 40 in a single workweek. While there are several exemptions to the FLSA’s overtime pay requirements, the most common is the white-collar exemption. This exclusion applies to:

To determine if an employee qualifies for the white-collar exemption, there are three tests, each of which must be satisfied:

As we mentioned earlier, the FLSA requires that employees be paid at least one and a half times the regular wage rate for all hours worked over 40 in one workweek.

An employee’s “regular wage rate” generally includes all compensation, with a few exceptions. So things like piece rate or bonus pay are also taken into account. After calculating total compensation, divide it by all the hours worked during the workweek to determine an employee’s regular wage rate.

To determine the hours an employee worked, you need to consider all compensable time, which can even include:

While calculating overtime may seem straightforward, for many employers, it’s anything but. For example, common questions we get from clients include:

Q: What happens if I have employees who work in multiple locations with separate federal IDs. Should I combine their hours for overtime purposes?

A: Yes, the hours need to be combined.

Q: If I pay bi-weekly and one of my employees worked 44 hours in week one but only 20 in week two, are they still owed overtime for four hours?

A: Yes, you would need to pay the employee four hours of overtime.

Q: If an employee volunteers for a shift and works over 40 hours in a week, do I still have to pay them overtime?

A: Yes, you would need to pay overtime for any hours over 40 in a workweek.

Q: If my employee has two different rates of pay for different jobs they work, how do I calculate the right wage rate for overtime?

A: To determine an overtime rate based on the type of work performed, you need to track the pay rate for each of the overtime hours worked and calculate a blended base pay rate. The formula for blending two hourly rates is:

Some states have enacted legislation that differs from what the FLSA requires, such as greater overtime obligations.

Some examples include:

If your employees are subject to both state and federal laws, you’ll need to comply with whichever law has provisions that are more generous to the employee. Be sure to check your state law, which can usually be found on your labor department’s website.

If you’re found to have incorrectly calculated overtime or not paid overtime when it was due, you have to pay back wages for the time worked. If you neglect to pay overtime properly and a complaint is filed with the DOL, you’ll pay damages, penalties, and a fine. You may also face additional damages if you violated state laws. In Massachusetts, for example, you would pay treble (triple) damages.

Generally, compliance issues arise when a disgruntled employee asks why they’re not getting paid overtime, then files a charge with the DOL. At that point, you’ll get a letter that will either let you know you’ll be audited or that you need to pay the overtime wages due to your employee.

The best way to avoid these situations is with detailed recordkeeping. Under the FLSA, you need to have records for each non-exempt worker that include identifying information and data on wages, hours, and other items. Most of the information you’ll already be maintaining and, for purposes of the FLSA, it doesn’t need to be kept in any particular form or separately. Be sure to keep payroll records for at least three years and those on which wage computations are based for two.

Failure to maintain accurate records will make it very difficult to prove compliance with the law so it is important to follow these requirements. It’s important to note that states may have additional recordkeeping laws, so you’ll want to make sure you’re in compliance with those as well.

FLSA Overtime: Covered nonexempt employees must receive overtime pay for hours worked over 40 per workweek (any fixed and regularly recurring period of 168 hours – seven consecutive 24-hour periods) at a rate not less than one and one-half times the regular rate of pay.