Overtime Pay: What You May be Missing

Many employers (especially those just starting out) have a hard time seeing through the murky waters of overtime pay and how it should be addressed legally speaking. Many employers get tripped up by confusing work week hours with pay period hours.

Overtime for non-exempt hourly employees needs to be calculated on a 7-day time period, regardless of how often your employees are paid. For example, if an employee who is paid on a bi-weekly schedule worked 60 hours in week 1 and 20 hours in week two, the employee would be due 20 hours of overtime pay. But it is not always so simple. In some states, including California and Colorado, you need to be even more observant as they each have daily/shift requirements.

Penalties for Non-Compliance

The penalties for failing to comply to employment laws pertaining to civil money penalties can add up quickly. The Federal Labor Standards Act (FLSA) is a federal law that establishes standards affecting overtime pay eligibility, minimum wage, record keeping and more in the private sector as well as local, state, and federal governments. The Wage and Hour Division is authorized by the FLSA to assess such civil money penalties totaling up to $1,100 as well as back pay for each violation of the Act. If your employee files a claim against you, the agency is thus obligated to investigate. You must be the one to provide payroll records for the previous three years as well as all time card records for your employees for a minimum of two years prior.
In order to steer clear of the pitfalls associated with failure to comply to overtime pay rules, look for an automated timekeeping software that is capable of auto-calculating earnings with accuracy in compliance with your state’s rules. Also be certain to retain sufficient payroll records in the event that you are investigated to keep yourself above board.