Thinking about correctly calculating overtime can be enough to send shivers of trepidation down the spine of even the most confident manager. Just knowing that the Department of Labor (DOL) is standing ready to levy fines for mismanaged overtime will strike fear into the budgets of many. So, what can you do about it? How can you be sure that you're paying your employees correctly and not making unintentional mistakes? Hang in there — we've got you covered. Once you've finished reading our quick guide to effectively using the TriNet Overtime Calculator, you'll be answering overtime questions with confidence.
There are 5 keys to knowing when you need to calculate overtime:
Once you have these 4 pieces of information, you have all the facts you need to use the overtime calculator with confidence. Let's briefly dig into each of these pieces of information.
Some broad-sweeping exceptions to these categories include:
Now that you know where your business fits into the puzzle, it's time to look at the jobs in your organization.
When you're talking about an employee's exemption status, you're really asking the question, "is the job this employee performs exempt or nonexempt from the Fair Labor Standards Act's (FLSA's) overtime rule?" Whether or not an employee must be paid overtime has very little to do with your actual employee and everything to do with the job duties they perform.
Whether or not an employee must be paid overtime has very little to do with your actual employee and everything to do with the job duties they perform.
Although the FLSA's job exemption tests can get rather convoluted, they basically boil down to:
There is another salary test that you can take into consideration along with the above tests, and that is:
This test in and of itself does not determine whether or not a position is exempt from overtime eligibility but must be taken into consideration along with the other tests. For example, if a job seems to pass the administrative exemption test but does not make more than $684 per week, the job is not exempt and must be paid overtime.
A few states in the United States require a company to pay their employees for more than 8- or 12-hours worked on a particular day. Those states are:
These states also follow the general rule outlined by the FLSA that any hours worked over 40 in a given pre-defined workweek must be paid overtime. A workweek may run from Sunday to Saturday, Monday to Sunday, etc. The basic premise is that it is a static period of time and is consistently the same 7-day period. Even if your regular pay period is a 14- or 15-day period, overtime is based on a consistent 7-day workweek timeframe, or, as we discussed above, daily. So now that you have a feel for whether or not an employee is eligible for overtime pay, let's talk about how to calculate that pay.
When you hired your employees, it was either based on an hourly rate or a salaried rate. The TriNet Overtime Calculator takes all of the guesswork out of the math and makes the process easy for you. As the example below demonstrates, the calculator is divided into calculating overtime for hourly wages and salaried wage earners. Here's an example of how it works: Ray is an hourly employee who makes $19.35/hour. He worked 46 hours this week, 40-hours of straight time and 6-hours of time and a half overtime. You want to provide him with a detailed summary of his pay. You will provide the following information into the calculator, and it will do all of the math for you:
Once you have provided this information, the system will provide you with the following information:
Similarly, if Charlie had an annual salary of $40,248 per year, you would use the Salary Overtime Calculator section and provide:
The system will then provide you with the following information: Salary:
This calculator makes the process much easier for you! However, you may be wondering when straight-time overtime would be an appropriate selection for the overtime calculator.
Overtime is necessary when an employee physically works more than 40 hours per week (or 8 hours per day in some state instances). If you pay an employee for holiday, vacation, or sick pay during any day of a workweek, the employee has not physically worked — even though they have been paid for the time. Straight-time overtime is used in these instances. If an employee has actually worked 36 hours during the week, but their time cared, because of holiday pay, indicates 44 hours, those 4 hours over 40 are paid at straight time. It would look like this:
However, if an employee's time card indicates a total of 49 hours during that same workweek, the time would need to reflect:
For more information on overtime and the FLSA, check out these articles on our blog: Is There a Maximum Amount of Overtime My Employees Can Work in a Week? Is there a special way of calculating overtime for an inside sales full-time salaried, non-exempt employee?