What is Overtime?
Overtime refers to the additional hours worked by an employee beyond their regular working hours as defined by their employer. Overtime pay is the additional compensation that employees receive for working those hours.
In the United States, overtime pay is governed primarily by the Fair Labor Standards Act (FLSA), which is a federal law administered by the Department of Labor (DOL).
The Fair Labor Standards Act (FLSA)
According to the FLSA all non-exempt employees are entitled to overtime pay for hours worked beyond 40 in a given workweek. The act also states that overtime pay rate across the country should not be less than 1.5 times the regular hourly rate of an employee.
The FLSA does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, unless overtime hours are worked on such days.
Additional compensation for working weekends or evenings depends on mutual agreement between the employer and the employee (or their representative). The FLSA does not mandate additional compensation for weekend or evening shifts or double-time pay.
There is no limit on the number of hours employees aged 16 and older may work in any workweek.
Law in different states can also have an impact on overtime pay regulations. The state law in California, mandates that companies must compensate employees at double their regular rate if a workday extends beyond 12 hours. In instances where states have their own overtime regulations, state law typically adds additional guidelines on top of federal law.
While most companies are subject to FLSA overtime regulations, there are a few exceptions. The FLSA covers businesses if they meet any of the following requirements:
- Makes more than $500,000 in gross annual sales
- Formed as an activity of the government
- Health- or education-oriented
- Engaged in interstate commerce in any capacity
Exempt employees under the FLSA
The most common exemptions under the FLSA are the so-called white-collar exemptions:
- Executive
- Administrative
- Professional
- Outside sales
- Computer professional
It’s important to note that meeting the job title alone doesn’t automatically qualify an employee for exemption; their actual job duties and salary must meet specific criteria outlined by the FLSA regulations. Additionally, certain industries or specific job roles may have additional exemptions or regulations beyond the FLSA.
For more information, please visit the US Department of Labor Wage and Hour Division Fact Sheet #17.
Working with an Employer of Record (EOR) can help maintain compliance with overtime regulations – contact us today.
Why is it important for recruitment companies to know how overtime in the US works?
Recruitment companies need to understand US overtime laws to ensure they’re placing candidates in roles compliant with labor regulations. It helps them accurately negotiate compensation packages, maintain candidate satisfaction, and uphold ethical business practices.