Make Sure that your Employees Receive Right Payment for their Overtime Work
Nowadays, overtime work can lead to many legal conflicts between employers and employees. The situation is more common with hourly employees and this happens because the time spent at work every day is not properly calculated.
According to the Fair Labour Standard Act, all people who are paid per hour and exceed the legal limit of 40 hours a week should be paid extra. In their case, the payment has to be equal with one and a half times the amount received as regular pay rate. The law is clear, but problems appear when we have to calculate how much overtime a person did during a week.
Technology comes to the rescue
There is no doubt that we love technology, especially when it helps us keep track of the time spent at work by our employees. Also known as online punching system, the online time card calculator is an awesome tool that will spare many employers a lot of headaches.
This virtual time card is easy to use. All you have to do is fill the starting and ending hours every day and you see how much time you worked, if you did overtime and calculate the total payment you are entitled to. In this case, there is no room for interpretation and everybody is happy.
If you worked 41 hours in a week, you can consider that you did overtime
Like we mentioned before, the Federal labour regulations state that each person paid at hourly rates does overtime if he or she works more than 40 hours in a week. Furthermore, the time worked out of the legally established limits should be paid at a higher rate.
Every employer has to follow this rule. Some variations are allowed, but nothing lower than the rate of 1 and ½ per extra hour. For example, some business owners pay the overtime double or have other compensations in mind for their team members, but each company has the right to decide that internally.
It’s important to keep in mind that, apart from Federal regulations, businesses need to know the overtime policy from their states. You can look for more information on this matter at the Labour Department from your state.
How to calculate overtime correctly
The overtime has some special calculating rules. Vacations, sick time or holidays shouldn’t be included in this category unless the business’s policy states this. Then, think about the employee’s daily rates. He or she might have different wages, so there are three possible ways to calculate:
- overtime rate based on the highest amount of wage;
- overtime rate based on the average amount of wage;
- overtime rate based on the initial amount received after the legal working time is completed.
In the end, we will mention that your legal advisor can tell you more about overtime payment. If you don’t have one, consult an attorney and follow the rules if you want to avoid fines and other consequences from the Labour Department.