Most non-exempt employees in the US earn overtime pay (at 1.5x their regular rate of pay) after 40 hours in a workweek. So, it’s easy to think that if that employee works 46 hours, 6 of those hours would count towards overtime pay. But what happens when some of those hours are vacation or sick hours? Will that affect the employee’s overtime calculations? Yes.
Category: Overtime & Wages
If you are a non exempt employee or you have non exempt employees in the US, times are about to change! Since 2004, overtime threshold rules have stayed the same. This means that the cost of living threshold increased and the requirements for overtime did as well. The Obama administration took up the issue and directed changes to overtime laws that would have expanded the number of eligible workers. However, the Trump Administration prevented those changes. Nearly 3 years later, the rules are finally slated to change, but severely watered down from the previous plan.
On Sept. 24th, 2019 the US Department of Labor (DOL) announced their final overtime rules that will affect many Americans. In fact, the new overtime rule will make overtime pay available to over 1.3 million workers and will provide an estimated $298.8 million in additional pay. The new overtime rules will become effective officially on Jan 1st, 2020. Here’s what you need to know:
As an employer, it’s incredibly important to ensure that you are paying your employees at least minimum wage. The federal law sets the base wage for all workers in the United States, but minimum wage can change on a city and state level. California, for instance, varies minimum wage all across the state. California Lawmakers changed the minimum wage for many counties and cities on January 1st of this year, but there was another increase effective July 1st, 2019. This change affects large employers (26 or more employees) and small employers (25 employees or fewer). Below you will see a summary of counties and cities making changes to minimum wage. We encourage you to speak with your local labor board to ensure that you are familiar with your city’s changes.
Let’s face it: there are a lot of regulations to follow when it comes to owning a business. Following all the applicable laws can be tough. Although it can be time consuming, you should make sure that you are always following the latest legal protocol. The best way to avoid these pitfalls is to hire an HR consultant to keep you on the right path. However, not every business can afford someone like that, so you should know where to go if you’re the self-help type of business owner. A good place to start is the Fair Labor Standards Act (FLSA) website. The FLSA establishes standards for minimum wages, overtime pay, record keeping, and child labor. So, what are some common pitfalls employers run into that lead to underpaying employees?
Note: These rates should be used for general informational purposes only and are not intended to be used for legal or professional purposes. Please visit state websites before making changes to employees’ rates.
There are a lot of minimum wage changes this year in the nation’s states. The rates are to take effect on January 1st, 2018 but some, like New York, may take effect December 31st, 2017.
On August 28th, 2017, many minimum wage workers that saw a wage increase back in May will see that increase revoked. The state government of Missouri passed a law barring municipalities from raising the minimum wage above the state’s rate.
When the state’s rate goes into effect, employers are at liberty to reverse the increases employees got in St. Louis due to the local law. The city’s new minimum wage will revert to $7.70 per hour. That’s a $2.30, or 23%, pay cut for employees.
Editor’s note: For 2021 mileage rates, please go here.
Over the long Fourth of July weekend, many California locales saw minimum wage increases. Ten cities and counties increased the minimum wage on July 1st, 2017 as a part of some expanded local ordinances regarding minimum wage, paid sick leave, criminal background checks, and employee scheduling, among others.
This will affect payroll for the month of July, beginning on the first. Companies need to update pay rates for the July pay periods.
Calculating overtime according to California labor laws is so complicated, it practically takes an accounting degree to get it right. It’s probably not something you want to do by hand, unless you actually are an accountant.
According to the DIR website, the California overtime rules require that employees are compensated for:
Double time rules seem complicated because we hear a lot about it from many different places. Some companies offer double time for holidays, but that’s just a benefit, not a law. Some countries offer double time on Sundays, but that’s not how it works in the US. Double time rules are pretty simple actually. There are only two instances in which employees should get double-time pay.
Try our free overtime/double-time calculator.
Overtime violations are something all employers want to avoid but a lot of small businesses don’t know overtime law. Running a small business is hard enough without also having to be familiar with all the federal and state labor laws.
It’s our job to know overtime laws. That’s why we’ve put together this infographic. It highlights the most common ways employers violate overtime laws, how to avoid violations, and the penalties that might ensue.
How to Avoid Overtime Violations
An HR consultant or in house HR department can help companies stay compliant with overtime laws. Human resources professionals are trained in labor laws and are a great resource to have on your team.
However, some small businesses cannot bear that expense. This infographic will help keep you informed so that you can make good labor decisions. Using a time tracking service will also help reduce the possibility of errors.
Many employers simply do not allow unauthorized/unapproved overtime, and they outline this in the company handbook.
The stipulation might read something like this: “We do not pay for unauthorized overtime. Approval must be obtained prior to starting any work over 40 hours. If overtime is not approved, it is not our responsibility to pay time and a half.”
But watch out if you have a rule like this in your employee handbook! Just because it’s in the book doesn’t mean it’s validand lawful, and you probably still owe the employee for the time they worked.
(If you need an overtime calculator, try our free tool.)
California labor laws are a little different from federal labor laws. For example, California has daily overtime laws in addition to weekly overtime. Therefore, even if employees’ weekly hours don’t exceed 40, they receive overtime pay after 8 hours of work. This law protects employees from overworking. This is an important protection, but sometimes working longer daily shifts is just convenient. Some employees prefer working four 10 hour shifts, for example, instead of five 8 hour shifts.