A mechanical necessity of wage compliance is the calculation and payment of overtime. This blog post deals only with straight overtime calculations. There are other posts that respectively discuss the phenomenon of split-shift time, spread of hours, call in time and tipping. We also deal with regularly scheduled workweeks and paydays in different posts as well. This is only a basic description of how overtime works.
The first forty hours of any work week are considered regular time. Regular time is calculated at whatever the hourly rate is you pay your employees, and must be at least the mandatory minimum wage. Any hours actually worked after this are calculated at overtime. To illustrate this, lets assume that you have an employee who works forty hours in the first four days of your workweek, the fifth day is a paid holiday, and the employee works five hours each on the sixth and seventh day of the work week. Lets assume a round number for the hourly wage: $10.00/hr.
The first forty hours are paid at regular time. The 8 hour paid holiday on day five is paid at regular time rates, even though 40 hours of regular time have already been worked, because the holiday time was not time actually worked. The five hours each on days six and seven are paid at the overtime rate of time and a half, or $15/hr.
Overtime is calculated on a weekly basis. Depending on your jurisdiction, there is some support for the contention that if you overpay in one week, you can offset a following week’s pay to make up for the overpayment. However, your offset cannot result in a violation of the minimum wage or overtime laws, and there may be certain classes of payments which cannot result in an offset. Therefore, if you are considering doing this, consult an attorney who is very familiar with state and federal overtime and minimum wage laws and litigation first.