Laws About Working Overtime
Laws that determine under what circumstances overtime must be paid to an employee are enacted at both the state and federal level. Absent any state labor laws that are more favorable to the employee, covered employers must follow, at the minimum, federal labor laws. Many states have enacted labor laws that have requirements that exceed those of federal law. If you operate a business in one of those states, you must comply with the state laws.
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Covered Employers Under Federal Law
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If you own a business that engages in interstate commerce you must comply with federal labor laws. If you are an enterprise, defined by the Department of Labor as a business with at least two employees that annually has more than $500,000 in gross sales or business done, or if you run a hospital or business providing nursing care for residents, schools, preschools or government agencies, you are also subject to the federal overtime laws.
Basic Overtime Requirements
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Simply stated, if a covered employee, one who works for an employer subject to the federal overtime regulations, who is not salaried, works more than 40 hours in a workweek, you must pay that employee overtime at a rate of 1 1/2 times his regular rate of pay. Federal law has no regulations regarding weekend work, holiday pay or pay for working on religious holidays. A workweek is defined as any recurring period of 128 hours, which is seven consecutive 24-hour periods. There is no restriction on what constitutes the first day in a workweek.
Exempt Employees
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Exempt employees are those that are paid on a salaried, not hourly, basis. For the most part, you do not have to pay these workers overtime if they work more than 40 hours, but some exempt employees are entitled to overtime if they meet certain tests, determined by the Department of Labor. There are five categories of employees for which there are specific tests to determine if you must pay them overtime: administrative, executive, professional, computer-related and outside sales.
State Laws
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California is an example of state law that is more restrictive to you and more favorable to an employee. Under California labor laws, overtime must be paid to nonexempt employees over 16 who are legally allowed to work in their occupation. In California, you must pay overtime if your employee worked over eight hours in a day or 40 hours in a week. Time and one-half must be paid for hours over eight and through 12. Hours exceeding 12 in a day must be paid at double-time. The first eight hours of overtime on the seventh consecutive day of work in a workweek must be paid at time and one-half, any hours over eight on the seventh day are paid at double-time.
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