Character is like a tree and reputation like a shadow. The shadow is what we think of it; the tree is the real thing.
- Abraham Lincoln, 1809 – 1865
In the payroll world, one of most common questions we receive is in regards to overtime. It’s covered by both state and federal law and the law that is most in favor of the employee is the one that dictates the circumstances.
For the federal rules in general, overtime pay is at one and a half times the regular rate of pay for hours worked in excess of 40 in a pre-defined 7 day week. If you pay commissions to hourly workers or non-discretionary bonuses, those amounts should be included in calculating the regular rate of pay to determine the overtime premium.
You, as an employer, may have signed agreements that say the employee can’t work over 40 hours in a week, or the employee cannot incur overtime without your authorization. It doesn’t matter; you have to pay the overtime premium if the employee is in an overtime situation. This is viewed as a management issue and you may discipline the employee for violating your work rules, but you can’t hold back the extra pay.
And of course, overtime can be a very complex issue – who’s exempt, was the person in question really an employee and not an independent contractor, what is the actual rate of pay to determine the overtime premium.
