Overtime is defined as any amount of time which is worked by an employee outside of their regular contracted hours. As a business owner, there may come a time where you want to consider offering overtime to your employees. If you find that your business is really taking off and expanding, you may all struggle to complete all of the week’s work within the hours you have. Rather than struggling to keep up with it all of the time, offering overtime to your workers might be the best solution. They could either come in an hour earlier in the morning or stay and hour later in the evening.
Overtime is something which can be beneficial to both parties. You will be gaining that extra labour to help the business run smoothly, and your employees are able to make a little extra money for their family. You may also find that the extra work which gets done opens the door for you to either hire extra employees or research new avenues for business and expand.
If you have shift workers in your business, you may find that you pay them more because they already work nights than you would for a daytime employee. Shift workers will often have to work more overtime than day workers because there are manual labour jobs to be done and essential counts of product and shipments.if you want to make sure that you are playing your employees accurately for their overtime you can bring timecards into the workplace; check it out and measure the exact hours your employees work each day.
If you are looking into offering overtime to the people who work for you, then you will want to take a look below at the issues to consider:
Legal
- Averaging hours- you cannot use this technique to calculate overtime. The working week must be calculated separately to any overtime your employees complete throughout the week in order for it to be accurate.
- Waiver of overtime – Employees have the right to work a minimum number of hours a year- calculating by the FLSA. you cannot coerce the employee into waivering this right if you don’t want to pay them for the extra hours.
- Time of payment – overtime must be treated like the rest of an employee’s pay. If an employee does a certain number of hours through the month, the overtime must be paid at the nest available payday.
- Posting requirements – make sure that the overtime regulations for the workplace are displayed somewhere all of your employees can access.
Management
For an employee to be named as able to complete overtime, they must be found to be non-exempt by the FLSA. they must also work more than 40 hours a week to qualify. In general, any employee who is paid hourly and works full time can be considered non-exempt, and therefore is able to take advantage of overtime.
Calculating Overtime
When it comes to knowing how much to pay your employees for work outside of hours, you need to adhere to the rule that you have to pay at least 11/2 times their regular pay. When you are calculating the regular pay you must include any bonuses given for good performance, efficiency of the employee’s work and the quantity of work.
Overtime for Salaried Employees
If an employee is salaried, the overtime rate will be simply calculated by converting this salary into an hourly rate and then making the overtime rate from this.
– 40 hours – as with an hourly employee, the rate is calculated by dividing a weekly salary by 40 and then calculating what 11/2 of the rate is.
– Fewer than 40 hours – if an employee works less than 40 hours per week when salaried, they will be paid the overtime rate of 11/2 on any hours which exceed 40 hours per week. This means that if an employee works 35 hours a week, they will be paid their normal hourly rate until 40 hours, and then the 11/2 rate after that.
– Salaried with an irregular work week – if an employee’s hours vary week on week, then the overtime will ba calculated like this: for every hour over 40 hours, the employee will be paid he 11/2 rate.
– Monthly and semimonthly salaries – if an employee is salaried monthly, then the overtime will be calculated by converting the salary into an hourly rate.
– Job or day rate- if you have employees which are paid a certain sum each day regardless of the hours they work; you can calculate their regular pay by adding all of this together and then dividing it by the hours they worked. This will give you the hourly rate for the employee and you can then calculate the overtime from there.
– Piecework – if your employee is paid by the piece they produce, you will need to calculate their hourly rate by adding together the profit they earned throughout the week, and the dividing it by the number of hours the employee worked. From this you have the quality of their work in pat and you can calculate the overtime from this.
Make sure that when you are calculating overtime for your employees that you check it thoroughly so that either you or they don’t end up out of pocket from it. Overtime is an essential part of the business world, and if you are able to offer it out you can see a huge improvement in the amount of work you get done each week- an in the long term this can turn into profit for your business. The added benefit of overtime is that by offering it to your employees, they are more likely to stay with your company because they know they can work extra is they are struggling financially for whatever reason. In the end you will gain a lot of loyal employees who will be happy to put in the extra work for your business, and your business can grow and develop along the way.
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