Overtime Pay
Small businesses often experience lots of pressures with sudden client requests and needed company and operational deadlines. With few workers or a small staff, employees are often asked to keep working beyond regular office hours. One thing employers must constantly be aware of is that American workers are guaranteed the right to receive overtime pay in excess of one’s regular forty-hour week (otherwise called ‘time and a half’). This is actually provided for in the Federal Fair Labor Act.
Owners of small scale businesses must know under what circumstances they are obligated to pay their employees. There are actually 2 conditions which may tell you if in fact your workers now are entitled to extra pay. Remember though that these are not absolutes. Your company may still be liable for overtime pay even if it is not associated with any of the two following conditions. The first condition is that if your business revenue in a year reaches $500,000 and above (and if it provides nursing or medical care), you are obligated to give overtime pay.
The second condition is that if employees engage in interstate commerce, wherein goods and/or services they provide and/or deliver are done so out of state, you are obligated to give overtime pay. With this second one, administrative, secretarial, factory, janitorial work, and others like them would be in the same category.
Be fully knowledgeable about various provisions of law with regards to overtime pay. Educate yourself on federal labor laws which will apply particularly to your business and industry. A primary reference will be the U.S. Department of Labor (DOL). You may consult with the DOL specifically for your state. Confirm your liability or exception even if you have a small scale business. Exception under federal guidelines does not guarantee exception under state guidelines. Law requirements for overtime pay are discussed by DOL’s Wage and Hour division law. Also, you can provide online training for your HR person on compliance from HRcertification.com.
It might be best to avail the services of an expert a labor attorney since both federal and state laws are quite complex. At times, it’s not clear which specific business types are required to comply. Nolo.com discusses possible situations and also has an attorney directory.
It is important for you to formulate an overtime policy. You need to personally involve yourself as the company lays out in writing, rules and regulations regarding overtime policy. Explain them clearly and thoroughly to your employees and enforce them strictly. This way, you save yourself from unforeseen labor violation lawsuits. Smartbiz.com lists issues which entrepreneurs ought to consider when developing company policy on overtime pay. You may also read “Four Overtime Traps to Avoid” from Entrepreneur magazine.
Do not make special deals or special arrangements with your company employees just so you can avoid giving your employees overtime pay. Employees are bound by federal law to receive overtime pay. In fact, they cannot even waive their rights nor can they agree to lower wage pays. That’s definitely against the law.