By Steve Kania, Vice President of Product Management, SurePayroll
The federal overtime premium is 50 percent for nonexempt employees when they work more than 40 hours during a workweek.
This may include other non-work time for which an employee is compensated where dictated by state law or company policy. To put it plainly, if sick pay, holiday pay, vacation pay, jury duty or other similar compensation puts a given employee over 40 hours in a week, those hours don’t have to be counted for the purposes of overtime pay under the FLSA.
Although it is common, the Fair Labor Standards Act (FLSA) does not require non-exempt employees to receive overtime pay for hours worked on Saturdays, Sundays or a holiday (unless they are hours worked over 40 in a workweek). Employers may choose to do this (state law may require it) and it can certainly be beneficial in keeping employees satisfied while working these typically off times.
Some states require overtime for an employee working more than eight hours in a day, or for working a seventh consecutive day, but this is not required under the FLSA. Employers covered by both state and federal law are required to follow the rule that most benefits the employee to ensure they receive the appropriate compensation.
Put simply, the overtime rate is required to be paid to non-exempt employees for all time worked over 40 hours in a workweek, but as an accountant and adviser to business clients, you should have a cursory understanding of some of the complexities related to what is considered “time worked.”