The Fair Labor Standards Act requires employers to compensate employees for working overtime. This requirement applies to most employees, except for those under the age of 16 and those who work in an exempt category, such as administrators and employees working in a professional capacity. Overtime pay is based on the employee's hourly pay rate and must be paid in a timely manner following the extra hours the employee works.
Mandatory Pay Rate
Under the Fair Labor Standards Act, employers must compensate employees for overtime hours by paying a minimum of time and a half for each overtime hour worked. As of 2010, working beyond 40 hours per week is considered working overtime. Thus, if an employee works 45 hours in one week, his employer must pay him 1.5 times his regular pay rate for the five hours of overtime work.
Length of Work Week
For purposes of calculating overtime pay, the work week is 168 hours, or seven consecutive 24-hour periods. An employer cannot average the hours an employee works over a pay period instead of counting hours per week when counting overtime hours. For example, if an employee works 60 hours in one week and only 20 in the next week, the employer must still pay overtime for 20 hours of work.
Payment Date
Although employers may pay overtime separately in a separate check at the end of the week, they are not required to do so as long as they compensate the employee on her next paycheck following the overtime hours. For example, if Ms. Jones works 60 hours on the week of March 2 but her next paycheck isn't due until March 16, her employer does not have to compensate her for her overtime until March 16.
Hourly Rate Requirement
Calculate overtime compensation based on the employee's hourly pay rate. If you pay the employee a flat rate per month or he gets paid on commission, divide his total amount of pay by the number of hours worked to determine his regular rate of pay. Base his overtime pay on that rate of pay. For example, if an employee makes $2,000 per month and works 20 days in a month, divide 2,000 by 20 to determine how much he makes per day ($100). Then divide that by 8 hours per work day to find his pay per hour, which is $12.50. If the employee then works 50 hours in one week, you must pay him time and a half for 10 hours. In this example, time and a half would be $18.75 per hour.
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