Overtime

Overtime Explained
1.    Overtime refers to the amount of time an employee works beyond their normal scheduled working hours.

2.    “Normal hours” is determined in several ways and varies based on the individual’s job. In most instances, normal hours are custom and are aligned with society’s interpretation of what are considered healthy and suitable hours of employment. Typically, an employee’s scheduleis created through an agreement between the employer and the respective worker.
3.    Overtime laws are designed to dissuade employers from exploiting their workers through the institution of unfeasible or exploitative working hours.
4.    Overtime laws take into account a number of considerations, such as preserving the mental and physical health of workers, levels of productivity, or macroeconomic issues such as increasing the employment rates of a particular economy.
5.    Overtime laws are regulated and typically require corporations or business entities to pay their workers at a higher hourly rate for additional hours spent working beyond their normal schedule.
6.     An employer may choose to pay workers a higher rate for overtime work if not obliged to do so by law, particularly if they believe that increased pay will proportionately increase the businesses productivity.
7.     As a result of the increased wage rate attached to overtime work, employees are typically encouraged to work beyond their traditional hours. Not only does this increase productivity but it also increases the employee’s disposable income. 
8.    Overtime pay rates are decided through the employer’s discretion, however; the limits and particular amounts are regulated by the United States’ Federal Government. In most situations and under most employee contract agreements the overtime pay rate is awarded as a percentage increase of the worker’s regular hourly salary. For example, a common overtime pay rate is 1.5 times the amount of the individual worker’s regular hourly rate.

Overtime Laws
1.    The Fair Labor Standards Act is the primary piece of legislation which governs overtime pay rate in the United States.This piece of legislation attaches laws that apply to all employees in industries, which are engaged in, or produce goods for, interstate commerce.
2.    The Fair Labor Standards Act establishes a standard work week of 40 hours for many industries and types of workers. The 40 hour work week acts as a template; the Fair Labor Standards Act (using this template) attaches an overtime pay rate at one-half times the workers’ normal pay rate.
3.    The legislation creates two categories to establish eligibility laws for overtime compensation. Employers are not required to pay exempt employees the overtime rate but must do so for all employees who fall under the “non-exempt” status of work.
4.     Employees who are considered exempt from the regulation include: types of administrative, professional, and executive employees. Attached to these occupations are three tests that will constitute whether the employee is exempt or not. The tests revolve around salary basis, salary level, and the individual’s particular duties.
5.    The majority of employees who receive hourly wages are entitled to seek overtime payments from their employer.