How to Pay Employees for Overtime
How familiar are you with the Fair Labor Standards Act (FLSA)? If you thought that overtime constituted straight pay for non-exempt (hourly) employees who work over 40 hours a week, then it's time you brushed up on the overtime rules.
Many think the FLSA only applies to anyone who earns minimum wage, but in reality, it applies to anyone working in a business engaged in interstate commerce--which is virtually any small business in today's marketplace.
In the "over-40 hours" scenario, the Act requires employers to pay non-exempt personnel wages totalling at least one and one-half times the regular rate for any work done in one workweek with over 40 hours worked in that week.
The law becomes gray when employees perform both clerical and technical duties, and mistakes in reporting and paying overtime can be expensive; penalities could add up to more than $10,000 per day.
Employers should consult with human resource professionals to make sure they understand the law and its interpretation. Paying hourly employees what they're due is much less expensive than a daily fine.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.