Overtime Pay Definition
Overtime pay is extra cash compensation for the hours that nonexempt employees work in excess of 40 in one workweek.
That's according to Federal overtime pay law, as is all the information in this section. Municipal and state overtime pay laws might be different or more generous than the Federal equivalent, and are discussed in the next section.
At this writing, the current overtime pay rate for eligible employees is one and one-half (1.5) times their regular rates of pay.
For example, if an employee ordinarily earns $20 per hour, then the employee's overtime pay rate is at least $30 per hour, as shown below.
$20 Per Hour x 1.5 = $30 Per Hour
A workweek is defined as seven consecutive 24-hour periods or 168 consecutive hours: in other words, seven whole days in a row.
7 x 24 Hours = 168 Hours
Employers may start a workweek on any hour of any day in the calendar week. (It does not have to be the traditional 8:00-5:00, Monday through Friday workweek with time off for weekends.) Employers may also create a workweek that differs from those of other employees working in the same establishment.
Employers may pay eligible employees by some other method than hourly, such as by piecework or annual salary. But, in any case, employers must still calculate overtime pay based on the hours eligible employees work per workweek.
Overtime pay is due on the regularly-scheduled paydays for which employees earned it. For example, if an employer pays regular wages every Friday, then every Friday the overtime pay employees earned in the same workweek is also due and payable.
Broadly, non-management, "blue-collar" hourly and salaried employees who perform manual labor for the types of organizations listed below are eligible for overtime pay. "White-collar" hourly and salaried employees who work for the types of organizations listed below and earn less than $455 weekly ($23,660 annually) are also broadly eligible.
Update: In a new rule, the U.S. Department of Labor (DOL) increased the salary threshold from $455 to $913 weekly ($47,476 annually). The new rule takes effect on 12/1/2016 and is expected to extend overtime protections to 4.2 million more workers who were not previously eligible.
- Any engaged in interstate commerce
- Any that gross $500,000 or more annually
- Federal, state and local government agencies
- Hospitals and other institutions engaged in the care of sick, aged or mentally-ill people
- Educational institutions
Job titles are irrelevant for determining overtime pay eligibility. Eligibility is based on occupations, wages or salaries and job duties. Exceptions might apply.
Generally, employers may classify the following types of employees as exempt from overtime pay.
- White-collar executive, administrative and professional employees who earn more than $455 per week and regularly exercise discretion and independent judgment with respect to matters of significance.
- Employees who earn $100,000 or more per year, and also customarily and regularly perform any one or more of the exempt duties or responsibilities of executive, administrative, or professional employees.
- Certain computer professionals who earn more than $455 in weekly salaries or $27.63 in hourly wages, depending on their specific job duties.
This is only a general overview of Federal overtime pay eligibility. Other rules and exceptions might apply. For example, employers may classify some workers as partially exempt from overtime pay. But, employers can't simply label employees as "exempt" to evade the law.
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