Common Mistakes Employers Make Calculating Overtime
In This Article
- Negligence By Design
- Salaried Isn't Exempt from Overtime
- Negligence by Rationalization
- Grant Comp Time Instead of Overtime
- Missed Hours for Off the Clock Work
- Tipped Employee Overtime
- Including Vacation, Sick, Holiday, Personal in Overtime Calculations
OT Ruling On Hold --- On November 22, 2016 a U.S. District Court Judge granted an Emergency Motion for Preliminary Injunction and thereby enjoined the Department of Labor from implementing and enforcing the Overtime Final Rule slated to take effect on December 1, 2016.
Negligence By Design
With office workers it is very common to see employers instruct their employees to self report hours worked to a manager or directly to ASAP even. Employee's often self created excel time sheets do not provide the assurances of having proper overtime calculations. Even the most detailed daily tracking will have mistakes, fail to check against all overtime situations, and often do not even account for the weekly work week calculations vs. the pay period totals. Remember a work week can cross into 2 separate pay periods. If you have only a few employees, we suggest them up on ASAP's HUB to help avoid OT mistakes. If you still would like your employees to self enter the hours worked vs. clock in/out, the application can accommodate this free entry of hours by employees and might actually help streamline your reporting as employees can associate hours worked with a department, cost center or grant.
Salaried Isn't Exempt from Overtime
No, your dishwasher isn't exempt from overtime. As employment attorney G. Roger Beck point out; "To be exempt from overtime pay, an employee's situation may need to meet both a "salary" test and a "duties" test under applicable law." Make sure your employee qualifies as exempt under FLSA & Colorado labor law. Keep in mind the most stringent test will apply to the employer not the weakest.
Negligence By Rationalization
"But they want the hours." Sure and I'm sure they would want the extra pay overtime laws provide them for working the extra hours too. Even if an employee agrees to work the extra hours at their standard rate, they are still protected by Colorado & FLSA laws. This rationalization would not hold water under a labor audit or a claim by a current/former employee. The damages can be costly.
Grant Comp Time Instead of Paying Overtime
If you are a private non-governmental employer, trading comp time for overtime pay in almost all cases would be in violation of Colorado labor laws and/or FLSA. Because governmental exclusions apply, many employers may feel justified in setting up a comp time plan. If you have a comp time policy or wish to create one, we suggest you create under the guidance of an employment lawyer.
Missed Hours for Off the Clock Work
In today's 24/7 technology at your fingertips world, this actually has started to be more of a problem as work seeps into every device and our daily consciousness. Checking emails, checking VM's, creating plans; it all leads to a slippery slope for those engaged non-exempt employees. For further reading on how to prevent off the clock work; read this SHRM article and this one by Inside Counsel.
Tipped Employee Overtime
The rate of overtime pay is based on the full minimum wage rate, not the lesser tipped minimum wage rate. ASAP's restaurant customers may by now have noticed this as our systems provide two sets of pay types for hourly employees that help auto-calculate this deviation from standard rate x 1.5 calculations. If you have any questions about how to use/enter those hours, please let us know. To see the Colorado calculation examples on this matter; visit here. If you are not a payroll client of ASAP yet, please be careful with this item as we have seen many larger payroll providers fail to set up the safe guards and reporting codes for restaurants unless requested.
Including Vacation, Sick, Holiday, Personal in Overtime Calculations
Ending on a positive note for employers, you only need to calculate overtime based on worked hours. Again this often slips into manual calculations and even system calculations if time-off hours are not properly categorized.
In summary, if you are concerned about your compliance with over-time rules, please reach out so that we can either get you set up on HUB Time Tracking for your employees, a more advanced workforce management solution or direct you to a labor lawyer that can review your policies & provide more specific analysis.