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.


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