Earnings may be determined on a piece-rate, salary, commission, or some other basis, but in all such cases the overtime pay due must be computed on the basis of the average hourly rate derived from such earnings. This is calculated by dividing the total pay for employment (except for the statutory exclusions noted above) in any workweek by the total number of hours actually worked. Non-exempt employees can’t receive comp time because, under FLSA regulations, they must be paid at least minimum wage for all hours worked. Any business covered under the Fair Labor Standards Act (FLSA) is how much is overtime pay required to pay nonexempt employees overtime pay.

Make Sure Your Business Is Compliant with All Overtime Laws

First, overtime pay isn’t available to salaried workers who are considered “executive, administrative or professional” employees. This fact sheet provides general information on the exemption from minimum wage and overtime pay provided by Section 13(a)(1) of the FLSA as defined by Regulations, 29 C.F.R. Part 541. It used to be that the terms “exempt” and “non-exempt” were clearly defined. But the DOL has more rules to protect lower-paid exempt employees from falling below the minimum wage, by requiring that they must be paid overtime. Some states require employers to provide a notice at the time of hire to employees that contains information about their employer, pay, and, in some cases, whether they are classified as exempt or non-exempt from overtime.

Using Bonuses or Catch-up Payments To Get an Exempt Employee Above the Minimum

• Now that you know when salaried employees are entitled to overtime wages, let’s jump into how to calculate their overtime rate of pay.
• Overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek.
• The working hours of a highway or city motor vehicle operator cannot be averaged.
• On Jan. 1, 2025, the rule’s new methodology takes effect, resulting in the additional increase.
• Under the federal law, nearly all hourly workers in the U.S. are entitled to overtime pay after 40 hours a week.

It need not coincide with the calendar week, but may begin on any day and at any hour of the day. Different workweeks may be established for different employees or groups of employees. Normally, overtime pay earned in a particular workweek must be paid on the regular pay day for the pay period in which the wages were earned. Employers covered by FLSA are required to pay the applicable overtime premium to nonexempt employees for all hours worked over 40 in a workweek, even if the work resulting in overtime was not authorized.

Minimum hourly wage (from 15 June

Refer to the table in the section above for the standard hours after which overtime is payable. Before refusing overtime, you must first take reasonable steps to deal with these family responsibilities in some other retained earnings balance sheet way. If despite your efforts, you are still required to meet those family responsibilities during the overtime period, only then you can refuse overtime. During a week when one or more general holidays occur, the standard hours of work are reduced by 8 hours for each holiday. Additionally, there are other factors to consider, such as internal equity (meaning employees in similar roles and with similar experience are paid comparably) and employee morale.

• Careful communication should be rolled out to explain why employees formerly categorized as exempt are now nonexempt.
• There are also different types of overtime calculations of overtime hours (e.g., daily) and different types of overtime (e.g., tipped employees) and rates that can vary between states and cities.
• This obligation to cover travel, board and lodging expenses only applies to travel in Norway.
• Examples of activities that may result in individual employee coverage for non-profits include but aren’t limited to making/receiving interstate telephone calls, shipping materials to another state, and processing credit cards.
• Employees who have certain types of jobs and who are paid certain minimum salaries are considered exempt from receiving overtime pay.
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The July 1 increase updates the present annual salary threshold of $35,568 based on the methodology used by the prior administration in the 2019 overtime rule update. On Jan. 1, 2025, the rule’s new methodology takes effect, resulting in the additional increase. In addition, the rule will adjust the threshold for highly compensated employees. Starting July 1, 2027, salary thresholds will update every three years, by applying up-to-date wage data to determine new salary levels.

Understanding the U.S. Department of Labor’s New Overtime Pay Regulations

The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half the regular rate of pay for all https://www.bookstime.com/ hours worked over 40 hours in a workweek. Unless specifically exempted, employees covered by the Act must receive overtime pay for hours worked in excess of 40 in a workweek at a rate not less than time and one-half their regular rates of pay. The Act does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, as such. Under the FLSA, overtime pay is one and one-half times an employee’s regular pay rate for every hour that is worked beyond 40 hours in a workweek. There are exceptions because not everyone is eligible for overtime pay, including exempt employees.