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A lesson in overtime pay

March 5, 2019

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Two employers learned a lesson in understanding the rules of the Fair Labor Standards Act. The FLSA requires that non-exempt employees receive overtime pay based on their “regular of pay”. Unfortunately, many employers don’t understand that term. Regular rate of pay is not the hourly figure that the employee was hired at, it is, as stated in Fact Sheet #23, ” The regular rate includes all remuneration for employment except certain payments excluded by the Act itself.” This means that discretionary items do not have to be included, but things like shift differentials, which are not discretionary must be included. Bonuses based upon productivity and attendance also have to be included. These items added up and then divided by the hours work determine the actual hourly rate upon which overtime has to be calculated.

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