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The Clock is Ticking Avoid penalties with a well-structured overtime policy. By Christina Hopke
should be specified on the Employee Notice provided at the start of employment, as required by Minnesota law. The U.S. Department of Labor
employees paid on an hourly basis. However, the calculation can become complicated if there are any variants in employee pay (e.g., shift
The threshold for overtime under the federal Fair Labor Standards Act (FLSA) is 40 hours in a workweek. Minnesota state law sets the threshold at 48 hours.
recently revised its regulations implementing the FLSA, which narrowed the application of exempt classifications. This means more workers will be considered non-exempt employees and overtime requirements will now apply to those workers.
B
eing careless about overtime compliance is akin to licking a metal pole on a cold winter day – you will learn an unpleasant lesson the hard way. Employers can avoid an unwanted lesson on overtime violations by developing a good understanding of overtime requirements so they can effectively implement a compliant policy. An effective overtime policy requires the following:
Identify what overtime is and when it is applicable. The threshold for overtime
under the federal Fair Labor Standards Act (FLSA) is 40 hours in a workweek. Minnesota state law sets the threshold at 48 hours. Most employers are likely to be governed by the lower federal threshold. A policy needs to make clear when overtime applies by defining employees’ standard working hours. Clearly establish who is eligible to receive overtime pay.
Ensure that employees know their classifications. This
Contributor ________ Christina Hopke is an employment law and litigation attorney at Rinke Noonan.
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Explain how overtime is calculated.
Avoid misunderstandings among employees by making clear that overtime is based on actual hours worked. Holiday hours, vacation time and sick leave do not count toward hours worked. The workweek does not need to match the calendar week but does need to be a fixed period of seven consecutive 24-hour periods. When calculating overtime compensation, employers need to determine whether there are any unique factors relevant to determining an employee’s regular rate of pay. Determining the “regular rate of pay” is generally straightforward for
differentials). The regular rate of pay also typically needs to factor in commissions, certain bonuses, and other incentive payments. Identify the procedure for overtime requests.
Address how overtime needs will be communicated to employees, including any minimum notice employees will be given of an overtime request, whether accepting overtime work is optional or mandatory, and what excuses are sufficient to avoid mandatory overtime. Employers also need to ensure it is clear who within the company can make the decision to have employees work overtime and how that decision must be documented. Typically, employers want to clearly communicate that working unauthorized overtime will result in disciplinary action. A clear process ensures that both management and employees have shared expectations.