{"id":8011,"date":"2024-07-23T12:57:36","date_gmt":"2024-07-23T18:57:36","guid":{"rendered":"https:\/\/www.blockadvisors.com\/resource-center\/?p=8011"},"modified":"2024-07-23T13:46:54","modified_gmt":"2024-07-23T19:46:54","slug":"how-much-is-overtime-pay","status":"publish","type":"post","link":"https:\/\/www.blockadvisors.com\/resource-center\/small-business-services\/how-much-is-overtime-pay\/","title":{"rendered":"How much is overtime pay, and what does the Fair Labor Standards Act mean for businesses?"},"content":{"rendered":"\n<p>Let\u2019s chat about something that affects both small business employers and employees\u2014overtime pay! In this post, we will review the Fair Labor Standards Act (FLSA) rules surrounding overtime. We\u2019ll cover who is entitled to overtime pay and calculating overtime pay. Plus, discuss the potential penalties for employers who don\u2019t follow federal and state overtime rules. If you\u2019re wondering, \u201cHow much is overtime pay?\u201d or even, \u201cWhat is overtime pay?\u201d you\u2019ve come to the right place!<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-overtime-pay\">What is overtime pay?<\/h2>\n\n\n\n<p>Overtime pay is additional pay awarded to nonexempt employees who work more than a set number of hours in a week (or sometimes in a day) with a single employer. Sometimes, overtime pay is also mandated for workers who put in more time than their contract or terms of employment specify.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignleft size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"400\" height=\"200\" src=\"https:\/\/www.blockadvisors.com\/resource-center\/wp-content\/uploads\/2024\/07\/Employees-working-overtime-1.jpg\" alt=\"Nonexempt employee working overtime for overtime pay\" class=\"wp-image-8014\" style=\"object-fit:cover;width:250px;height:160px\" srcset=\"https:\/\/www.blockadvisors.com\/resource-center\/wp-content\/uploads\/2024\/07\/Employees-working-overtime-1.jpg 400w, https:\/\/www.blockadvisors.com\/resource-center\/wp-content\/uploads\/2024\/07\/Employees-working-overtime-1-300x150.jpg 300w\" sizes=\"auto, (max-width: 400px) 100vw, 400px\" \/><\/figure>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h-fair-labor-standards-act-flsa-overtime-pay-regulations\">Fair Labor Standards Act (FLSA) overtime pay regulations<\/h2>\n\n\n\n<p>The federal Fair Labor Standards Act (FLSA) is the primary law that governs overtime.&nbsp; Under the FLSA, nonexempt hourly employees must receive overtime pay if they work over 40 hours in any given workweek.&nbsp;<\/p>\n\n\n\n<p>During the Great Depression, overtime pay was established to protect the rights of workers. In the 1930s, the U.S. government stepped in to create laws under the U.S. Department of Labor\u2019s Fair Labor Standards Act (FLSA) to protect workers from unfair labor practices.<\/p>\n\n\n\n<div class=\"wp-block-create-block-hrb-article-cta\" class=\"wp-block-create-block-hrb-article-cta\" style=\"background-color:#005d1f\"><div class=\"hrb-article-cta--image\" style=\"background-image:url(&quot;https:\/\/www.hrblock.com\/tax-center\/wp-content\/themes\/hrb_tic\/img\/on-laptop-at-desk-graphic.png&quot;);background-size:contain;background-position:center;background-repeat:no-repeat\"><\/div><div class=\"hrb-article-cta--copy #ffffff\"><h3 class=\"main-heading\">Payroll services made simple<br><br>Cross paychecks off your small business to-do list<\/h3><div class=\"quick-links-list\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.blockadvisors.com\/small-business-payroll-services\/\">Learn more<\/a><\/div>\n<\/div><\/div><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-is-flsa-overtime-pay-mandatory\">Is FLSA overtime pay mandatory?<\/h3>\n\n\n\n<p>The FLSA distinguishes between \u201cexempt\u201d and \u201cnonexempt\u201d employees.&nbsp;<\/p>\n\n\n\n<p>Certain categories of employees, such as executive, administrative, professional, and some computer-related positions, may be considered exempt from the FLSA\u2019s minimum wage and overtime requirements (such employees must meet both a duties test and a salary test to be considered exempt).&nbsp; Exempt employees typically are paid a set salary regardless of the number of hours they work and do not qualify for overtime pay. &nbsp;(It is important to note that some states may have different rules for who is an exempt employee and who is a non-exempt employee.)<\/p>\n\n\n\n<p>All other employees are considered nonexempt. Nonexempt employees are typically paid an hourly wage and are subject to the FLSA\u2019s minimum wage and overtime requirements. &nbsp;In other words, it is mandatory to pay overtime to any nonexempt employees who work more than 40 hours in a workweek.<\/p>\n\n\n\n<p>Let\u2019s look at the differences between exempt and nonexempt employees another way:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>FLSA Exempt employees<\/strong><\/td><td><strong>FLSA Non-exempt employees<\/strong><\/td><\/tr><tr><td>Fair Labor Standards Act-exempt employees are NOT entitled to overtime pay. These exemptions usually apply to higher-level professional positions. Exempt employees are paid a set salary for their expertise and responsibilities and overtime pay doesn&#8217;t apply to them. &nbsp;<\/td><td>An FLSA non-exempt employee IS eligible for overtime pay. Usually, non-exempt jobs pay on an hourly basis. Though some salaried jobs may qualify, it is less common to come across salaried non-exempt worker positions<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-is-freelance-work-covered-under-the-flsa\">Is freelance work covered under the FLSA?<\/h3>\n\n\n\n<p>Not all types of workers are FLSA eligible. Freelancers and independent contractors are not covered under the FLSA. They are ineligible for overtime pay. <em>(Related read: <\/em><a href=\"https:\/\/www.blockadvisors.com\/resource-center\/small-business-tax-prep\/contractor-vs-employee\/\"><em>Should You Hire a Contractor vs. Employee?<\/em><\/a><em>)<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-state-overtime-pay-guidelines\">State overtime pay guidelines<\/h2>\n\n\n\n<p>Certain states also require overtime pay if nonexempt hourly employees work over a certain number of hours in a workweek or in a given day. Here are some of the significant state-specific nuances related to calculating overtime pay:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-daily-overtime-rules\">Daily overtime rules<\/h3>\n\n\n\n<p>While the FLSA sets the federal overtime threshold at 40 hours per workweek, some states have different criteria, such as:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Alaska<\/strong><\/td><td>Overtime at 1.5x regular rate if work &gt; 8 hours\/day<\/td><\/tr><tr><td><strong>California<\/strong><\/td><td>Overtime at 1.5x regular rate if work &gt; 8 hours\/day or 40 hour\/week Overtime at 2x regular rate if work &gt; 12 hours\/day<\/td><\/tr><tr><td><strong>Colorado<\/strong><\/td><td>Overtime at 1.5x regular rate if work &gt; 12 hours\/day or 40\/hours\/week or &gt; 12 consecutive hours<\/td><\/tr><tr><td><strong>Maine<\/strong><\/td><td>Overtime generally limited to no more than 80 hours in two-week period<\/td><\/tr><tr><td><strong>Nevada<\/strong><\/td><td>Overtime at 1.5x regular rate if work &gt; 8 hours\/day (unless the employee entered into a written agreement to work four 10-hour days each week) or &gt; 40 hours\/week<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-much-is-overtime-pay\">How much is overtime pay?<\/h2>\n\n\n\n<p>If you\u2019re wondering, \u201cHow much is overtime pay?\u201d we\u2019ll give you a guide to calculating overtime next. Overtime pay is a minimum of one-and-a-half times an employee\u2019s regular pay. The way you calculate overtime for a non-exempt employee depends on whether they are hourly or salaried. Generally, you\u2019ll want to follow one of two methods when calculating overtime pay for your employees. Luckily, whether your non-exempt employee is paid hourly or a salary, the overtime calculation is straightforward. We\u2019ll outline each scenario below:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-calculating-overtime-for-a-non-exempt-worker-hourly\">Calculating overtime for a non-exempt worker (hourly)<\/h3>\n\n\n\n<p>Here are the steps to calculate overtime pay for nonexempt worker.<\/p>\n\n\n\n<p>1. First, find the base weekly pay. This is an employee\u2019s regular pay rate multiplied by 40 hours in a standard work week.<\/p>\n\n\n\n<p>Base Weekly Pay = Regular hourly pay rate x 40 hours\/week<\/p>\n\n\n\n<p>2. Next, calculate overtime pay. Multiply the employee\u2019s regular pay rate by 1.5. Then multiply that by the number of overtime hours worked.<\/p>\n\n\n\n<p>Overtime Pay = Regular hourly pay rate x 1.5 x overtime hours worked<\/p>\n\n\n\n<p>3. Finally, calculate the total pay owed by adding the base weekly pay and the overtime pay together.<\/p>\n\n\n\n<p>Total Pay Owed = Base Weekly Pay + Overtime Pay<\/p>\n\n\n\n<p>For example, if a non-exempt employee earns $15\/hour and works four overtime hours (for a total of 44 hours) in a particular workweek, the employee\u2019s base weekly pay would be $15 x 40 hours = $600.&nbsp;The employees overtime pay would be $15 x 1.5 x 4 overtime hours = $90. So, the employee\u2019s total pay owed would be $600 + $90 = $690.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-calculating-overtime-for-a-non-exempt-worker-salaried\">Calculating overtime for a non-exempt worker (salaried)<\/h3>\n\n\n\n<p>1. First, determine the regular rate for a standard work week. You\u2019ll need to define what constitutes a standard work week for your employees. In most cases, it is 40 hours per week.<\/p>\n\n\n\n<p><em>Regular Rate = Weekly Pay \/ Standard Weekly Hours<\/em><\/p>\n\n\n\n<p>2. Next, find the overtime rate. Multiply the regular rate by 1.5.<\/p>\n\n\n\n<p><em>Overtime Rate = Regular Rate x 1.5<\/em><\/p>\n\n\n\n<p>3. Next, calculate overtime pay by multiplying the employee\u2019s hours worked beyond the standard weekly hours by the overtime rate. Make sure you meticulously track your non-exempt worker\u2019s hours to ensure you are paying the correct amount.<\/p>\n\n\n\n<p><em>Overtime Pay = Additional Hours Worked x Overtime Rate<\/em><\/p>\n\n\n\n<p>4. Finally, calculate the total pay owed by adding the overtime pay to their regular salary.<\/p>\n\n\n\n<p><em>Total Pay Owed = Overtime Pay + Regular Salary<\/em><\/p>\n\n\n\n<p>Note: Calculating overtime can be more complicated in certain circumstances. For example, if someone gets multiple rates depending on what tasks they perform, their overtime premium is based on a weighted average.<\/p>\n\n\n\n<p>Calculating overtime is also more complicated if someone later gets a non-discretionary bonus. The amount of any non-discretionary bonus gets added to the workweek(s) in which the bonus was earned, thereby increasing the hourly rate of pay slightly. An employer then needs to &#8220;true-up&#8221; any overtime that was paid out in the applicable workweek(s) because it would also increase slightly.<\/p>\n\n\n\n<div class=\"wp-block-create-block-hrb-article-cta\" class=\"wp-block-create-block-hrb-article-cta\" style=\"background-color:#005d1f\"><div class=\"hrb-article-cta--image\" style=\"background-image:url(&quot;https:\/\/www.hrblock.com\/tax-center\/wp-content\/themes\/hrb_tic\/img\/on-laptop-at-desk-graphic.png&quot;);background-size:contain;background-position:center;background-repeat:no-repeat\"><\/div><div class=\"hrb-article-cta--copy #ffffff\"><h3 class=\"main-heading\">Payroll services made simple<br><br>Cross paychecks off your small business to-do list<\/h3><div class=\"quick-links-list\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.blockadvisors.com\/small-business-payroll-services\/\">Learn more<\/a><\/div>\n<\/div><\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-keeping-records-for-overtime-pay\"><font _mstmutation=\"1\"><\/font>Keeping records for overtime pay<\/h2>\n\n\n\n<p>Keeping records for overtime pay is critical to ensure your business\u2019s compliance with state and federal labor laws such as the Fair Labor Standards Act. Under FLSA guidelines, payroll records for overtime payments must be kept for at least three years. In addition, timesheets and other supporting documents showing wage calculations should be saved for at least two years.<\/p>\n\n\n\n<p>Make sure to read up on state payroll recordkeeping requirements in your area too. They may differ from federal guidelines.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-penalties-for-failing-to-pay-overtime\">Penalties for failing to pay overtime<\/h2>\n\n\n\n<p>Adhering to FLSA&#8217;s overtime rules is essential. Improper employee classification can result in costly penalties. At worst, failing to pay overtime may lead to employee lawsuits, back wages or payments, penalties issued by the Department of Labor (DOL), or even potentially federal imprisonment for repeat offenders. Luckily, a little up-front care will help you avoid these issues. Staying on top of payroll is crucial.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-calculating-overtime-pay-the-bottom-line\">Calculating overtime pay \u2013 the bottom line<\/h2>\n\n\n\n<p>Calculating overtime pay on your payroll can get complex fast. One way to make it easier is to have the right resources. Whether you\u2019re interested in managing payroll on your own with an online payroll software service like&nbsp;<a href=\"https:\/\/www.waveapps.com\/payroll\">Wave<\/a> or need personalized payroll help from <a href=\"https:\/\/www.blockadvisors.com\/\">Block Advisors<\/a>, you have options to eliminate the hassle so you can keep your focus on what you love.&nbsp;<\/p>\n\n\n\n<p>See how Block Advisors can help with your small business payroll needs and answer your questions.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.blockadvisors.com\/small-business-payroll-services\/professional\/?app_method=PAYROLL_METHOD\">Schedule a free payroll consultation today<\/a>.<\/p>\n\n\n\n<p><font _mstmutation=\"1\"><\/font><em>This article is for informational purposes only. The content may not constitute the most up-to-date information and should not be construed as legal advice.\u00a0<\/em><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><a href=\"https:\/\/www.blockadvisors.com\/\"><img loading=\"lazy\" decoding=\"async\" width=\"500\" height=\"205\" src=\"https:\/\/www.blockadvisors.com\/resource-center\/wp-content\/uploads\/2024\/06\/HR-Block-Block-Advisors-Logos.jpg\" alt=\"H&amp;R Block and Block Advisors logos\" class=\"wp-image-7918\" srcset=\"https:\/\/www.blockadvisors.com\/resource-center\/wp-content\/uploads\/2024\/06\/HR-Block-Block-Advisors-Logos.jpg 500w, https:\/\/www.blockadvisors.com\/resource-center\/wp-content\/uploads\/2024\/06\/HR-Block-Block-Advisors-Logos-300x123.jpg 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><\/figure>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Let\u2019s chat about something that affects both small business employers and employees\u2014overtime pay! In this post, we will review the\u2026<\/p>\n","protected":false},"author":1,"featured_media":8013,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1237,15],"tags":[],"class_list":["post-8011","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-manage-your-business","category-small-business-services"],"acf":[],"yoast_head":"<title>Overtime Pay: What Is It and How Is It Calculated | Block Advisors<\/title>\n<meta name=\"description\" content=\"Learn how to calculate your salary or hourly overtime rate with help from the experts at Block Advisors.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.blockadvisors.com\/resource-center\/small-business-services\/how-much-is-overtime-pay\/\" \/>\n<meta property=\"og:locale\" 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