The Fair Labor Standards Act generally requires employers to pay their employees one and one-half times their regular rate of pay for all hours worked over forty in any given workweek. While this basic principle appears to be straightforward enough, application of the myriad issues which arise under the Fair Labor Standards Act can be complex. This article certainly is not a comprehensive outline of issues that arise under the Fair Labor Standards Act’s overtime pay provisions, it will be useful in order to identify issues that can arise under the Act.
In the first instance, an employee’s entitlement to overtime is generally based on the “workweek concept.” Typically, an employer will total the number of hours an employee has worked in any given week. If the total hours is greater than forty, the employee is generally due overtime pay for all hours over forty. In this regard, employers are not permitted to average hours over two or more workweeks. For example, if an employee works thirty hours in one workweek and fifty hours in a subsequent workweek, he or she must be paid overtime pay for the overtime hours in the subsequent workweek regardless of the fact that the average number of hours worked over the two workweeks is forty.
With this principle in mind, the employee is entitled to be paid time and one-half his or her “regular rate” for all hours over forty. As a general matter, the “regular rate” must include all remuneration in any form which an employee receives. Nevertheless, the “regular rate” does not include certain forms of remuneration such as gifts, payments for periods when no work is performed as vacation and holiday pay, contributions to certain employee benefit funds, extra compensation paid for working hours in excess of eight in a day, and extra compensation paid for working weekends or holidays. This is not a comprehensive list of exclusions, but it illustrates that not all remuneration is always included in the determination of the “regular rate.”
Issues that arise under the overtime provisions of the Fair Labor Standards Act should be simpler. However, as can be seen from the main components of the overtime pay formula discussed above, they are not always quite as straightforward as they should be.