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Understanding overtime pay

When it comes to running a business there are several laws and other things that you need to understand. Managing business finances can be rough, especially when you have issues like overtime pay. You need to understand the rules and regulations pertaining to overtime pay in order to avoid troubles with FLSA and the IRS.

Check with your state laws pertaining to overtime pay in order to ensure you are within regulations. Federal law states that overtime is considered when an employee works in excess of 40 hours a week. Depending upon the state you are in you may need to start paying overtime when an employee works longer than 8 hour days for 7 days a week. It must be calculated on a weekly basis so you will pay an employee for 50 hours of work one week and only 30 the next if they didn't work as long the following week. There is no way for employees to accumulate time in this manner, it must be recorded as overtime pay.

To pay overtime correctly you will take the employees regular wages and pay that plus half of their regular wages. Let's say you pay them $10 an hour. You would pay $15 an hour for the overtime that they end up working for you. Some companies like to pay double time to reward their employees but this is not mandatory under Federal law.

There are some exemptions to overtime pay. This is usually mandated to employees that are contracted by the company and not considered a full-time employee. The overtime pay can fluctuate based on the type of work that they do. Most people in salaried positions will not be granted overtime pay. They have agreed to a set amount based on what their work is and they have to stay until their work is complete.

By law overtime pay must be paid and you cannot force your employees to sign anything to forego overtime. Regardless of the work, they must only work 40 hours or become salaried if you want them to work more without overtime pay. You may clearly state that you will not pay overtime and an employee that works overtime is doing so out of their free will and will not be paid. They are required to work 40 hours, nothing more.

It is the job of an employer to ask their employees to submit work hours and to ask for any overtime hours worked. A clock system can help you to track their hours and if they worked extra without permission you need to confront them on it but you still have to pay them.

Hiring a payroll service is a smart way to ensure you are taking care of payroll correctly. There are many different tax laws and other things that you need to worry about and it can be quite confusing. Outsourcing payroll will allow you to properly take care of everything without having mistakes.

Employees that are not full time or contracted have different requirements that they need to meet. This is also where a payroll service can help as they will be able to help with the fluctuating hours and will help you to determine the correct hourly rate based on the overtime and other things. Overtime pay is something that you do need to make sure you are handling properly or you will get in trouble with your state and Federal government. Employees want to be paid fairly and they will not have a problem reporting an employer that is not paying correctly.

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