Many businesses pay employees on a semimonthly basis, and this pay schedule does not change an employer's obligation to pay overtime. Federal laws govern overtime rules, and many states have their own additional rules that are even stronger. You must calculate overtime according to one seven-day business week.
Fair Labor Standards
The federal Fair Labor Standards Act mandates that employers must compensate employees for time and a half for each hour worked over a 40-hour workweek. An employee who makes $10 an hour and works 41 hours in a given week would be paid $400 plus an additional $15 to cover the time and a half hour of overtime she worked. The FLSA defines some employees as exempt. Salaried employees who make more than $23,660 per year and perform professional, executive or administrative functions might not require overtime compensation.
Read More: Overtime Guidelines by the Fair Labor Standards Act (FLSA) on Exempt vs. Non-Exempt
Several states have established overtime laws that supplement the federal law. When state laws provide more protection to employees than federal law does, state law trumps the FLSA. For example, in several states -- including Alaska, Colorado and Illinois -- a workday is limited to eight hours, and employers must compensate for overtime based upon the workday in addition to the FLSA workweek standards. If you pay semimonthly and your state defines overtime as any day longer than eight hours, you can't use your pay schedule to get around these laws.
Employee paychecks are distributed according to employer-determined workweeks, but the FLSA mandates that employers must limit the workweek to seven days. You can define your employees' workweek however you wish; for example, you might define the workweek as Thursday through Wednesday.
Even though a semimonthly pay period usually includes two 15-day periods or one 16-day and one 15-day period, you must still calculate overtime according to a normal seven-day week. If the pay period for a paycheck includes a half week, you can't count this as a full week. If payday is the 15th and an employee works 40 hours the first through the seventh, 40 hours the eighth through the 14th and then 42 hours the 15th through the 24th, you can't count the workday of the 15th as one week to avoid paying overtime.
Violating the FLSA is a serious offense, and your employees can sue you in federal court if you do so. If an employee wins a suit, she can recover lost wages as well as attorney's fees. You might also be fined by the Department of Labor, and repeated, willful violations can result in criminal prosecutions. Violations of state laws are handled in state courts, and the penalties vary from state to state but always include the right of your employees to sue you.
Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.