Computing Overtime

November 17, 2014

Every business owner must be aware of the Department of Labor’s method of computing overtime.  Some businesses are paying the correct amount of money and being assessed substantial penalties.  A common example of this is an employer who employs someone six days a week.  The employer give a fixed amount for the six days.  This amount may include time and a half for the hours worked over forty hours each week.  This meets the Washington State and federal requirements for payment of overtime, but not the recordkeeping requirements of the federal enforcement agency, the Department of Labor.  The DOL will take the position that the pay check does not include overtime and treat the check as payment for six days at the regular hourly rate, then make as assessment equal to the number of overtime hours times fifty percent of the hourly rate which it has computed.  This amounts to a payment  for overtime more than twice the amount due the employee.  The DOL can assess double the amount that it deems underpaid and is authorized to recommend criminal action.

There is no legitimate argument that businesses should not be paying overtime but the means of enforcing the law creates a trap for vulnerable businesses which are paying overtime.

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