Wednesday, 12 September 2018 14:51

ASA’s Attorney Discusses Overtime Laws

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Paid time off does not count toward overtime. If an employee utilizes eight hours of vacation, sick or holiday pay, they will be paid for 48 hours, but since only 40 hours were actually worked, there is no overtime due.


“Overtime is based on time worked. Only hours that are actually worked beyond 40 hours count toward overtime,” Farrington said.


Overtime must also be paid at an employee’s regular rate, which is the employee’s total remuneration for employment within the workweek divided by the total number of hours worked. This means that overtime must be paid on the employee’s base rate and all compensation, including bonuses and commissions. Farrington explained how to calculate overtime on bonuses and commissions on a monthly or quarterly basis.


Hours worked is defined as all time the employee is required to be on the employer’s premises, all time the employee is required to be at a prescribed work site and all time the employee spends in activities that benefit the employer. Because management has the total power to control, schedule and require the hours worked, it is therefore completely management’s responsibility to record and pay for hours worked, meaning an employer must pay for overtime even if it is unauthorized or unknown.


“Make sure it’s a proactive management responsibility to see that employees record and are paid for hours worked,” Farrington stressed.


Meals are not required by FLSA, but if they are given, they do not need to be paid as long as these three conditions are met: the break is long enough for the employee to consume a meal or use the time for their own purposes (typically 30 minutes), the break is uninterrupted and the employee is relieved from their duties during the break. It is important to note that many states have requirements pertaining to lunch breaks. While short 15-minute breaks are not required by FLSA, they must be treated as paid work time when given.


Noting that there is an overtime exemption for most employees paid on flat rate hours, Farrington explained that overtime is not required for “salesmen, parts men and mechanics” employed by a “dealership,” which is defined as an establishment that derives over 50 percent of its gross revenue from the sales of automobiles, trucks or farm implements.