.2601121313589.jpg)
Overtime pay errors are more common than many realize. Wage and hour laws can be detailed, and overtime calculations often involve more than simply multiplying an hourly rate by time-and-a-half. At Nichols Kaster PLLP, we regularly see how payroll mistakes can grow into significant damages. Understanding where employers most often go wrong is the first step toward identifying problems that may be shorting you the pay that you deserve.
1. Miscalculating the Overtime Pay Rate By Failing to Include All Required Forms of Pay
One of the most frequent overtime mistakes is when an employer does not use the correct overtime rate of pay. Many people assume the overtime pay rate is simply their hourly rate multiplied by 1.5. In reality, that rate must consider other forms of pay an employee receives in addition to the base hourly rate. This may include certain bonuses and commissions. While discretionary bonuses may be excluded from the regular rate, other bonuses that are tied to performance, attendance, or productivity, or that are paid after an employee fulfills a contractual agreement are considered non-discretionary under wage and hour laws and must typically be considered in calculating the overtime rate of pay. When these amounts are ignored, the overtime rate itself becomes inaccurate, resulting in underpayment even when overtime hours are properly recorded.
2. Paying Straight Time Instead of Overtime
Some employers pay “straight time” for hours worked over 40 in a workweek. This often occurs when employees have multiple pay rates, work irregular schedules, work at more than one location for the same employer, receive blended compensation, or are misclassified as an independent contractor. Hourly paid employees must typically be paid for overtime hours at one and one-half times the regular rate. Being paid on a straight time only basis can quickly add up to substantial unpaid wages when an employee works overtime hours.
3. Misclassifying Employees as Exempt
Employee misclassification continues to be a major source of overtime violations. Labeling an employee as exempt does not automatically make it so. Exemptions depend on specific job duties and salary requirements, not job titles alone. Employers who misclassify employees as exempt may deny them overtime pay they are legally entitled to receive.
4. Not Tracking or Paying For All Hours Worked
Accurate timekeeping is essential for correct overtime calculations. Employers sometimes fail to account for all hours worked or do not allow their hourly employees to record all time worked. This can include, for example, pre-shift tasks, post-shift responsibilities, or work performed remotely. Even small amounts of unrecorded time can affect whether overtime is owed and how much should be paid.
5. Improperly Averaging Hours Across Workweeks
Some employers attempt to average hours over multiple weeks to reduce overtime obligations. In most cases, this is not permitted. Overtime must generally be calculated on a single workweek basis. While certain alternative pay arrangements exist, they are subject to strict rules.
If you would like to discuss your situation, or suspect your employer may not have followed proper overtime or wage-and-hour rules, reach out to Nichols Kaster PLLP through our online contact form or call (877) 344-4628.