Employment Law Basics for Employers: Calculating Overtime Pay

When an employee does not meet any exemption from overtime pay under the Fair Labor Standards Act (“FLSA”), an employer must identify the number of hours of overtime worked in any given week.  But this determination involves a very convoluted process.

Calculating Hours Worked in a Given Week – a non-exempt employee is entitled to overtime pay for any “working time” above 40 hours in a given work week. The beginning and end of the work week is set by the employer and generally should not vary from week to week.  For example, you may define a “work week” as Sunday through Saturday, Monday through Sunday, or any other combination of seven days that makes business sense in your industry. 

In calculating working time, an employer is generally not required to include:

•        Waiting or “on call” time unless the employee is unable to use such time for his or her own purposes.  If employees are expected to be “on call,” you should consider a written policy or agreement detailing the way such time must be recorded/reported and how you will determine whether that time is compensable.

•         Meal breaks that are at least 30 minutes long, provided the employee is completely relieved of duties during their break. However, rest or “coffee” breaks of 20 minutes or less are usually considered as part of the employee’s working time.

•         Paid or Unpaid Holidays unless the employee was actually working.

•         Paid or Unpaid Time Off (such as sick leave, vacations, furloughs or suspensions).

•         Normal travel time spent commuting from the employee’s residence to their designated workplace.

•      Travel time spent as a passenger outside normal working hours, even if that travel is required to attend a business conference or sales meeting, unless that employee serves as the driver for other employees or the employer has a written agreement concerning compensable travel time.

However, each of the foregoing scenarios are subject to change based on specific facts and circumstances.  When in doubt, you should contact an attorney or human resources professional, as well as consult the US Department of Labor’s website for specific regulations and guidance.