Overtime Rules: Some are still working on the basics

When I decided to start blogging I had to make a decision. Do I just blog the updates or do I take on issues that I feel are important.  I made the decision that I would from time to time, when I had a slow news day, take on issues that I feel are important from a payroll point of view.  And today is one of those days.  Overtime is a basic right for the workers of this country and has been for over 75 years. Yet, it still never ceases to amaze me how many companies in this country still do not understand the basics of calculating overtime and paying employees properly. The law (FLSA) currently requires that an employee must be paid 1 1/2 times their regular rate of pay for all hours worked in excess of 40 hours in a workweek. When Secretary of Labor Francis Perkins worked on getting the FLSA passed back in 1938 she basically created the term regular rate of pay.  It never actually meant the rate at which you are normally paid–but was a combination of many different factors to arrive at the rate.  For example if an employee is paid $10 an hour normally and gets a bonus or a sales commission the overtime is not going to be based on $10.00 an hour but a calculated rate that takes this type of payment into account. That portion of the law has not been altered or changed in any way since 1938.  And according to the latest press release from the Department of Labor (DOL) another company–in this case AT&T Prime Communications LP has also gotten a public lesson on how to calculate overtime. And after this math lesson the company paid $122,254 in back wages to 255 employees.  In their press release on the investigation the DOL wrote: “This was a systemic, corporatewide issue that affected workers throughout the country,” said Cynthia Watson, regional administrator for the Wage and Hour Division in the Southwest. “The FLSA has been in effect for 75 years, and employers are responsible for knowing and following the laws that apply to their businesses.”

And that is the way I feel.  Overtime is not some new law that we are still working out the nuances of and it will take a while.  I would find it remarkable if there were still a lot of people working in a company or in charge of one that was alive and working  prior to the FLSA going into effect. We all grew up working under it. So come on employers out there–get the basics of overtime right.  It is the least you can do for your workers and for yourselves.  Remember along with those back wages can come penalties, fines and interest!