The U.S. Department of Labor Wage and Hour Division enforce the Fair Labor Standards Act of 1938, which governs working conditions and hours, exempt and nonexempt classification and minimum wage rates for most workers in the United States. In addition, the FLSA is the governing set of rules for overtime compensation. The rules pertaining to overtime apply to all employees covered by the FLSA; however, only certain employees receive overtime pay.
Exempt vs. Nonexempt
Nonexempt employees are the only workers who receive overtime compensation. The term "nonexempt" means that the worker is not exempt from the FLSA overtime rules. All hourly employees are nonexempt; however, all nonexempt employees aren't hourly, and some salaried employees are nonexempt as well. In addition to pay basis being the difference between some nonexempt and exempt employees, criteria that distinguishes nonexempt from exempt include job position, title, responsibilities. An employee who routinely exercises independent judgment in performing her job duties and whose responsibilities affect the management of her employer's business is not a nonexempt employee.
Anytime a nonexempt worker puts in more than 40 hours in a workweek, the employer has to pay overtime, according to the federal law. However, several states have their own laws about overtime that differ from the federal rules. Whenever the state's law benefits the employee, state law prevails. For example, employees in California receive overtime pay whenever they work more than eight hours in a day. In addition, whenever an employee works more than 12 hours in a day, he must receive double pay. If the employee stands to earn more working longer than eight-hour days, the California law would be applied in calculating his paycheck. The federal law doesn't require overtime pay or premium pay of any kind for working on weekends or holidays.
The term "unauthorized overtime" is used by employers in referring to overtime that's not approved by a supervisor or manager. Some employers have a problem with employees who decide to put in overtime hours without being required to do so or without asking a supervisor for approval to work overtime hours. Under the FLSA, there is no such thing as unauthorized overtime -- employers are required to pay employees overtime regardless of whether the company approved the extra hours. This means an employer's hands are tied when it has to pay for unnecessary or unapproved overtime. Employers that encounter problems with employees working too many hours often enforce policies that prohibit employees from working overtime unless it's approved. Employees who repeatedly violate the company policy on overtime are subject to disciplinary warning.
Overtime for Hourly Employees
Overtime pay must be at least 1.5 times the employee's hourly rate. If the employee is a salaried, nonexempt worker, the overtime rate is based on the employee's equivalent hourly rate. For example, if an employee earns $10.50 an hour, she would earn 1.5 times 10.50, which is $15.75, for overtime compensation.
Overtime for Salaried Employees
If a salaried, nonexempt employee earns $34,000 annually, his equivalent hourly rate is first based on the number of hours he's scheduled to work each week, that number is multiplied by 52 weeks. Therefore, if the salaried, nonexempt employee typically works a 40-hour workweek, his equivalent hourly rate is 34,000 divided by 2,080, which is $16.35. And if the salaried, nonexempt employee works a 35-hour week, his equivalent hourly rate is 34,000 divided by 1,820, which is $18.68.