Overtime pay: Everything you need to know

Do you remember the last time you worked more than 40 hours per week?

Maybe some colleagues were sick. Maybe your boss asked you to work longer. Maybe you had to finish an important project.

Either way, you aren’t alone in this. Employees in the U.S. clock in the 11th most hours per year of all countries within the Organisation for Economic Co-operation and Development (OECD), a worldwide organization consisting of 38 developed countries.

Working that many hours, and with overtime being the rule instead of the exception, you may be entitled to be paid differently and more generously for those extra hours of work.

This article will explain what overtime pay is and how it works, who’s eligible, and if your employer can make you work overtime. We also show you some circumstances in which you don’t qualify for overtime pay and what to do if your employer won’t pay you for your extra time worked.

What is overtime pay?

Certain employees who work more than 40 hours in a single workweek must receive a higher rate of pay for the extra hours worked. This is then called overtime pay. Unless exempt, overtime pay requirements apply to hourly employees and certain salaried employees.

What is regular pay?

As overtime pay is based on your regular hourly rate, we’ll quickly explain what regular pay is.

Regular pay is the amount of money an employer pays its employees regularly in exchange for their performed work. This also includes the payment of non-discretionary bonuses and commissions. Your regular pay will be at least minimum wage.

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Some payments are excluded from regular pay. Examples are payments for vacation, holidays, or illness. More importantly, overtime is also one of them.

How does overtime pay work?

Under the Fair Labor Standards Act (FLSA), every workweek consists of seven consecutive days, and full-time employees work 40 hours in such a week.

If an employee works more than those 40 hours, they start accruing overtime. Those who qualify must then receive time and a half (or more) of their regular pay for the additional hours worked. There’s no maximum number of hours employees older than 16 years can put in per week.

For example, if you earn $10 per hour and work one extra hour, your overtime pay is $15 ($10 x 1.5).

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Keep in mind that employers aren’t required to compensate employees extra if they work on holidays, Saturdays, or Sundays. They only have to pay extra once an employee works overtime, whether that’s on one of these days or a normal day during the week.

Bonuses and commissions count toward an employee’s regular rate of pay. This is important, as this affects how much overtime pay you qualify for, as it increases your overall salary.

Who is eligible for overtime compensation?

Not every employee is eligible to receive overtime pay. We have to distinguish between exempt and non-exempt employees to determine who is entitled to overtime pay.

Exempt employees

Exempt employees aren’t eligible for overtime compensation due to the regular salary they receive and the type of job they perform.

Examples of exempt employees include:

• Executives who lead more than two employees, have the authority to make personnel decisions like hiring and firing, and earn more than $35,568 per year ($684 per week).

• Salespeople who typically work away from the employer’s office and primarily make sales or obtain orders/contracts from clients.

• Administrative employees who perform office/non-manual work for the management. They also exercise discretion and independent judgment over a business’ significant matters.

Non-exempt employees

If you are a supervised employee who works hourly, and you don’t fall into any of the exemptions, you’re considered a non-exempt employee. In this case, your employer must pay you one and one-half times your regular pay for hours worked beyond 40 hours in a workweek.

Hourly employees and workers who receive a salary of less than $35,568 per year or $684 per week are usually eligible to receive overtime compensation.

It gets tricky when your employer labels you as an independent contractor because they are excluded from overtime pay. The reason is that independent contractors can decide how, where, and when they work. They technically work for themselves, and the ‘employer’ is really a client.

However, if the employer also controls how, when, and where you work, you aren’t an independent worker. Therefore, you may be entitled to overtime pay.

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Can an employer require you to work overtime?

Yes, your employer can usually dictate your schedule or hours and make you work more than the 40 hours you typically put in per week. This is called mandatory overtime.

But in turn, your employer must compensate you accordingly for the overtime hours you worked.

Some state labor laws may prohibit mandatory overtime for certain jobs. For example, Texas prohibits mandatory overtime for registered nurses and licensed vocational nurses. That’s why it’s important to look at your state's mandatory overtime rules.

Some employees prefer not to work overtime. But if it is reasonable and you refuse to work overtime, even with overtime pay, federal law allows your employer to discipline or even fire you.

However, as a full-time employee, you’re entitled to one day of rest per week. This means that your employer can’t require you to come to work every day. The maximum is six out of seven days per week.

Are employers required to pay for unauthorized overtime?

We also have to address unauthorized overtime when talking about overtime and overtime pay.

In contrast to mandatory overtime requested by your employer, unauthorized overtime occurs when employees work overtime without any consent from their management.

An employer can discipline you if you don’t follow the company’s overtime policies and work unauthorized overtime without managerial consent. But that is only the case if your employer truly has no knowledge of your overtime work.

However, not knowing about your overtime work would be hard to prove for any employer.

The FLSA states that a company’s management has to use its control to make sure their employees don’t clock in unauthorized hours. Otherwise, the belief is that management knows of the extra work that needs to be done and that the employee is working overtime.

Either way, your employer must pay you for all hours worked. Even if you work unauthorized overtime, your employer must pay you one and a half times (or more) your regular pay as overtime pay if you are a non-exempt employee.

Your earned overtime pay must be paid on the payday of your next regular pay period. For example, if you accrue ten hours of overtime in November and are paid monthly, you must receive your overtime pay with your regular pay for December.

What are some situations where you may not receive overtime pay?

Paying employees their rightful overtime wage can be costly for employers. And, in some cases, you may not qualify for overtime pay.

Let’s look at some situations where you may not receive overtime pay.

1. Having a different employee status

One of the most common reasons that you may not qualify for overtime is if your employee status is anything other than a regular non-exempt employee. For example, you may be classified as an independent contractor or contract-based worker.

In these cases, your employer doesn’t need to pay you overtime if you work more than 40 hours in a week. So, when applying for a new job, asking about your employee status and understanding its implications is important.

2. Being classified as a salaried employee

If you’re a salaried employee, then your employer usually doesn’t have to pay you for overtime work. Employers are allowed by state laws to classify employees who earn more than $684 as salaried employees, excluding them from overtime pay.

However, if you work less than this and believe you’ve been misclassified, you should contact your employer. You may be eligible for overtime pay.

3. Having less than 40 hours on your timesheet

If you work at an hourly rate, you probably have to keep track of your hours using a timesheet. This will reflect whether or not you worked overtime. If your timesheet shows less than 40 hours a week, then you probably don’t qualify for overtime pay.

You or your employer may accidentally remove or miscalculate worked overtime hours on your worksheet. If this happens, contact your employer. Changing timesheet errors is legally okay, and fixing the errors can help you get the money you deserve.

What can you do if your employer refuses to pay overtime wages?

Even if you and your employer know that you worked overtime, they might refuse to pay your overtime rate. Doing so would mean that you could lose a significant amount of money. In case that happens, you can do something about it.

If an employer violates overtime laws and doesn't pay overtime wages, the Department of Labor's Wage and Hour Division will investigate them. Once violations are found, the employer has to pay back any owed wages up to double the amount.

They may also face additional penalties of up to $10,000. They can even risk imprisonment if they are a repeat offender with a history of not compensating their employees correctly for their worked hours.

If you think your boss owes you overtime pay, You should review your state’s laws on overtime and the FLSA’s guidelines. You can then file a wage claim with the U.S. Department of Labor’s Wage and Hour Division (WHD) or hire an attorney to help you recover your lost wages from your employer.

You might wonder whether your employer can fire you for filing an overtime claim against them.

However, terminating your contract or retaliating against you because of a filed wage claim is illegal. You exercise your legal right, and federal law protects you when you engage in such a legally protected activity.

If your employer still discharges you or discriminates and retaliates against you in any manner, you can pursue retaliation, file a discrimination/retaliation complaint, or file wrongful termination claims against them.

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Handling overtime pay the right way

After reading this article, you now know what overtime work and overtime pay are. More importantly, you know how it works and how to determine whether you are working overtime hours and should receive payment.

This is especially important for hourly workers, as they are usually considered non-exempt employees, entitling them to overtime pay.

To learn more about work compensation and employee benefits, you can visit Jobcase’s Getting Hired Resource Center. Or, if you’re ready to hunt for a new job, check out our Job board, and start applying today.