Overtime earnings need to be adjusted against the period when it was earned.
If an employer pays a commission or bonus based on products or services sold in a previous period, the employer needs to adjust their employee’s overtime earnings against the period when it was earned.
For example, if employee A earns $500 in commission in June, the employer is required to pay them in the first payroll of July. They are also required to adjust any June overtime earnings to reflect the commission earned.
Pay frequency of overtime-eligible employees is required to be calculated based on defined workweeks, not semi-monthly.
Most often, employers assume that because they pay their employees bi-weekly, their overtime rate needs to be calculated bi-weekly as well. However, the FLSA requires payment of overtime hours to be based on a weekly period.
Companies who pay biweekly then need to separate the overtime hours and rate calculations into what was worked in week one and week two of the pay period. If not, the incorrect overtime pay will be calculated.
Production incentive earnings or temporary job transfer rates need to be included in overtime rate determination.
If an employer compensates employees with earnings based on performance/production, these earnings need to be included in the weekly average overtime rate determination. These are often overlooked in the weekly overtime rate calculation, exposing the employer to error and risk.
Some salaried employees are eligible for overtime pay.
Many employers have certain employees that are classified as salary non-exempt. These employees can earn a salary and receive extra for overtime hours worked. However, if they receive overtime hours including a vacation day or other non-worked time, the overtime rate does not apply.
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