Overtime Hours: How to Calculate and Pay Correctly?

by Anne B. Robinson

Show me at least one person who voluntarily and happily went to overtime hours. Nevertheless, sometimes you simply can’t do without them. Deadlines are so ingrained in our lives that they seem to be the norm. However, no one canceled the normalized work schedule, and the Labor Code strictly enforced it.

Ex-time is a forced measure, which should be separately paid and adequately accounted for. And no matter how the boss asks, “stay for an hour or two in the evening, but the project will be completed on time,” worked overtime should be recorded.

How should overtime hours be considered? It is worth noting that employees who need the money are interested in overtime. After earning enough money, the question “who will give me a loan when no one else will” will be irrelevant to them.

The United States has a complex system of minimum wage laws, with different rates applying in different states. Many workers are entitled to overtime pay for hours worked over the standard 40-hour week, but the overtime rate depends on the state in which they work.

There is a federal minimum wage, which is currently $7.25 per hour, but some states have their own minimum wage laws that set a higher rate. In these states, workers are entitled to be paid the higher of the two rates. As of January 2021, there were 29 states with a higher minimum wage than the federal rate, according to the National Conference of State Legislatures.

What Is Recycling?

To begin with, to avoid confusion, let’s find out what officially is not overtime. The law distinguishes between irregular working hours. So, in the first case, the concept of “overtime” does not apply.

In other words, if the employee’s schedule is irregular, under the Labor Code, more hours will not be paid as compensation. Instead, the employee is entitled to additional vacation days.

What Is Overtime?

Also, more hours taken by the employee on their initiative to complete tasks that they did not meet the deadline will not be paid. This rule applies when the employer gives the adequate subordinate time to complete the work. In such a case, no compensation is payable.

Remember here that the employer may not artificially create conditions that prevent an employee from completing tasks on time (for example, when an employee is assigned to do some project in 5 hours, but the assignment is given only an hour before the end of the shift).

In other cases, any work performed over the schedule is considered overtime and must be compensated with more hours.

Extra work is based on working hours standards. An employee must not work more than 40 hours per week. For some positions, there is a shorter work week. Employees must also take weekly rest breaks.

If these norms are exceeded, the employee is credited with overtime with compensation. The reasons employees may be required to do extra work are:

  1. The occurrence of a company emergency, a threat to company property, or other reasons for engaging the employee;
  2. Voluntary agreement of the employee. Where they need to work extra hours within the limits of the left hours per month, it is mandatory for disabled persons and young mothers).
  3. Extra work is also regulated. Thus, a maximum of 120 hours per year and 4 hours within two consecutive working days is allowed. In this case, the employee is entitled to compensation.

It is important to note that there are certain types of work for which it is impossible to work a standard long working day. Shift work is a typical example. Therefore, working hours are calculated based on quarterly and monthly norms in such situations.

Counting Extra Work

counting extra work

How to count hours should be a concern first for company managers. Much here determine specifics of the sphere of activity. The choice of a particular type of accounting should be fixed in the official internal rules. Working time in the company may be counted:

  • daily;
  • weekly;
  • in total.

In the latter variant, it is allowed to deviate the length of working time within a day, week, or month. It is important that the employee has worked the approved number of hours at the end of the reporting period.

In the daily scheme, overwork or underwork is counted within one day. Compensation for more hours is paid for each day. Overtime pay is given to the employee at the end of the month.

Procedure for Extra Work

To formalize an employee’s overtime, you can proceed as follows.

Obtain Consent from the Employee in Writing

It is better to do this before the publication of the scheduling order because the employee may give a refusal. In this case, the order issued will have to be corrected.

Draw Up an Appropriate Order

The document is drawn up in free form, indicating the name, the reasons, and the period of extra work. It is desirable to refer to the notices drawn up in advance and agreed with the employees.

How Overtime Hours are Paid

The legislation does not explicitly define a deadline for an employee to decide how overtime hours should be paid. Therefore, it is possible to choose the form of compensation even after the money has been issued. Nevertheless, deciding on this issue in advance is advisable, so there is no confusion later.

Mark them in the working schedule to formalize the additional days of rest. In the absence of such, the manager issues an order indicating the employee’s name and the reason for granting him additional leave. After reading this document, the employee puts his signature on it.

Refusal to Overtime

Employees usually do extra work voluntarily. Refusal to perform such work is not grounds for sanctions against the employee.

Payment for Overtime Hours on a shift Work Schedule

There are currently no established methodologies for calculating overtime. Therefore, the question arises as to how more hours are calculated. For example, the last day of the month fell on the weekend. How do I calculate half a shift (6 hours of overtime) worked for another employee? Unfortunately, there is no clear answer to this question.

In the absence of clear methodological guidelines, the question becomes very complicated. Therefore, the technical organization of this process has to establish additionally:

  • Form of calculation of the hourly rate (for example, within the framework of the labor contract);
  • An internal corporate standard. It is needed for calculating monetary compensation for overtime under the Labor Code and the advice of the relevant agencies.
  • What is the risk of incorrect calculation of more hours and compensation?
  • Unpaid compensation to an employee entails liability. All responsible persons, including the head of the company, are penalized under this article.

On compensation, management pays taxes and insurance premiums. Knowingly understating the amount of these payments would be considered a tax offense. Officials in such cases are held administratively liable, and the company must pay fines and penalties.

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