Yes. It is illegal to not pay overtime to hourly, or non-exempt employees if they work more than 40 hours in a workweek. Even if your non-exempt employees work overtime without your approval, under federal law, you are still expected to pay them overtime rates for those hours.
Have it in mind that not compensating them in these situations would be termed illegal. Also, note that the overtime pay will have to be at least a time and a half their regular rate of pay. Howbeit, note there are no limits to overtime hours an employee can work as long as they are adequately compensated.
Note that the federal overtime provisions are contained in the Fair Labor Standards Act (FLSA). According to the Act, any employee who is not considered exempt under the law will have to be paid overtime at a rate of 1.5 times their regular pay for every hour they work beyond 40 hours in one workweek.
Ideally, the current rules governing overtime are enforced by the DOL, and they tend to stipulate the conditions that more or less determine when overtime is paid, the rate at which workers earn overtime pay, and the exact classifications of employees that are considered exempt.
However, if as an employer you fail to comply with the Federal Fair Labor Standards Act and also did not pay qualifying employees for overtime hours worked, aside from being liable to pay for those unpaid overtime hours, you could also be facing very heavy fines from the state and/or the Department of Labor, such as liquidated damages and civil penalties.
Also, note that you may have to cater to the bill or costs your employee incurred while seeking legal advice and counsel; and if you keep restraining from paying overtime, you could face criminal charges. States also tend to have laws that have to do with overtime, and the general rules and exemptions can vary from the federal overtime pay rules.
If your state’s law is more stringent than federal law, then you have to adhere to that law, even though you will surpass the minimum compliance requirements of the federal law. If the federal law is stricter than your state’s law, and you are subject to federal law, even though your state mandates less to be in compliance. If you do make a payroll mistake, you can remedy it by providing retroactive pay.
Employees Exempted From Overtime Laws and Pays
Currently, in the United States, the DOL considers several classifications of employees exempt from overtime protections.
Note that this means that the employees can work beyond 40 hours in a workweek without being entitled to that time-and-a-half pay bump. According to federal overtime laws, an employee is exempt when they fall into one of the below classifications;
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Executive employees are individuals who earn a salary of at least $684 per week and whose main work responsibilities include managing the company or a recognized department or subdivision of the company. These employees tend to oversee or direct the work of at least two full-time employees and maintain the authority to hire or fire other employees, or even influence the process.
These employees according to DOL are those compensated on a salary or fee basis of $684 per week or more. Their major duties usually include the performance of office or non-manual work that has to do with the management or general business operations of the employer or clients. They are also expected to exhibit discretion and independent judgment in very critical business-related matters.
These employees are noted as individuals who earn a salary basis of no less than $684 per week and are more or less focused on the performance of work that warrants well-advanced knowledge and demands the consistent exercise of discretion and judgment.
These employees are those compensated either on a salary basis at a rate of no less than $684 per week or if compensated on an hourly basis, no less than $27.63 an hour. Have it in mind that their primary duties are expected to include the application of systems analysis techniques and procedures or the design and development of computer systems or programs.
Individuals that meet the outside sales exemption in their workplace are tasked with making sales, or receiving orders or contracts for services. They are expected to regularly work outside the employer’s primary place of work.
Aside from the class of employees mentioned above, other occupations don’t have to receive overtime pay under the federal Fair Labor Standards Act (FLSA). These occupations are usually covered by other provisions such as minimum wage, child labor, or equal pay. They include:
- Employees of motor carriers
- Employees of railroads, express companies, and water carriers subject to part I of the Interstate Commerce Act
- Employees of air carriers subject to Title II of the Railway Labor Act
- Outside buyers of poultry and dairy products
- Announcers, news editors, and chief engineers of radio or television stations in small communities
- Salesmen, parts men, or mechanics employed by automobile, truck, or farm implement dealers, and salesmen employed by trailer, boat, or aircraft dealers
- Drivers and drivers’ helpers who make local deliveries and are paid on a trip rate or similar basis pursuant to a plan which was approved by the government
- Agricultural employees
- Agricultural employees who incidentally do livestock auction work, if they receive the statutory minimum wage for time spent in the auction work
- Employees of nonprofit agricultural irrigation systems
- Workers employed by country elevators which are located within the area of production and have no more than five employees
- Employees who process maple sap into syrup or sugar, other than refined sugar
- Employees engaged in the local transportation of fruits or vegetables or workers employed or to be employed in the harvesting of fruits or vegetables
- Taxicab drivers
- Law enforcement and fire fighting personnel working for agencies employing fewer than five such persons
- Household domestic service employees who reside in the household
- Employees of nonprofit educational institutions who, with their spouse, serve as resident houseparents to children who are orphans or one of whose natural parents are deceased, if the houseparent together earn at least a minimum amount annually
- Employees of motion picture theaters
- Workers employed in forestry or logging operations by an employer who has no more than eight employees doing such work
Adequately grasping which of your employees are entitled to overtime protection is a major requirement under federal and some state laws. Note that your inability to extend overtime pay to all qualifying workers could result in lawsuits, fines, and possibly even criminal penalties for repeated and willful violations.
However, if you have any concerns over how your employees are classified and whether you are expected to pay over time, ensure to reach out to an experienced lawyer, especially since there are hefty penalties for not paying overtime when it is required.