Get Ahead of Overtime Errors in Five Steps

Under federal law, when a nonexempt employee works more than 40 hours in a workweek, employers must pay them 1.5 times their regular rate of pay for all overtime hours or risk violating the Fair Labor Standards Act’s overtime pay requirements. And that can be costly: employers guilty of willful or repeated violations are subject to a civil monetary penalty of up to $1,000 for each.

To correctly calculate and pay overtime, below are five common errors and tips to avoid them.

  1. Not paying employees for hours worked before or after work. Remember that you need to pay employees for all of the time they spend on activities that benefit the employer, even pre- and post-work. So be sure to calculate time spent at mandatory pre-shift meetings or cleaning equipment afterwards as hours worked that count toward overtime.
  2. Failing to count “off the clock” hours. The time employees spend checking emails outside of their normal work hours – even from their home – is compensable and counts towards overtime. To reduce this practice, advise employees not to use electronic communications beyond their regular work hours.
  3. Missing break time. While employers don’t need to pay employees for breaks that last 30 minutes or more during which they’re relieved of their duties, rest breaks of 20 minutes or less must be paid and count towards determining overtime.
  4. Avoiding certain waiting time. When employees arrive at the required start time but need to wait to begin their work because of the circumstances, they are “engaged to wait” and the time counts towards overtime hours. So know the difference between that and “waiting to be engaged,” which isn’t compensable.
  5. Not correctly classifying compensable travel time. While the DOL says time spent commuting to and from work is generally not considered hours worked, time traveling during employees’ normal work hours is compensable – locally as well as away from home unless they’re a passenger and not working – that counts toward overtime.

For more guidance on hours worked that count towards overtime, review our Overtime Policy Guide. Or contact Complete Payroll Solutions at 888-865-4470 for additional information.

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