A second significant requirement of the FLSA is the obligation of covered employers to pay employees a premium–extra pay–for work that is considered to be “overtime.” In most cases, this means that an employer will have to pay an employee one-and-one-half times his regular hourly pay rate for each hour in a week that the employee works over 40 hours. Keep in mind that some employees may be exempt from overtime provisions but not the minimum wage requirement.
The policy reasons behind the FLSA’s overtime requirements are hopes that if employers have to pay their existing workforces significant amounts of extra pay to work more than their normal weekly full-time schedules, there will be an incentive for employers to hire new employees rather than just assign their current employees additional work. Significantly, and contrary to beliefs held by many persons, neither the FLSA or any other federal law establishes a general maximum number of hours per week beyond which employees cannot be required to work. Only in particular industries, such as commercial transportation (truck drivers, airline pilots, etc.) where alertness has been considered to be essential to public safety, do certain other federal laws actually set work-time maximums that employers are not allowed to exceed.
A significant area of litigation concerning FLSA overtime requirements involves employer use, and sometimes abuse, of salaried employees. Unlike hourly employees, salaried employees are given a flat amount of pay for longer periods of time ranging from a week to a full year, and are paid that amount regardless of the number of hours that they might actually work in a given week, month, or year. These exemptions, commonly referred to as the “white collar exemptions,” are for employees who perform executive, administrative, outside sales, or professional functions. In 2004, rules regarding exemption from FLSA rules were updated. Employees earning up to $23,660 per year are automatically entitled to overtime pay whether they are classified as hourly or annual salaried employees. Employees earning $100,000 and performing some executive, administrative, or professional job duties on the other hand are automatically exempt from the FLSA’s overtime requirements.
Another significant fact about FLSA overtime requirements is that they are different for public-sector employees (federal, state and local government employees) and private-sector employees (those who work for private individuals or companies). Unlike private-sector employers, which must pay monetary compensation to their employees for overtime work, government employers have the option of giving their employees compensatory time off instead of cash. In pure form, compensatory time is giving an employee an hour off work at a later time for every extra hour of work performed. This is like a form of extra vacation time. However, to comply with the time-and-one-half principle underlying overtime compensation, government employers must provide one-and-one-half hours of compensatory time to an employee for every hour of overtime in a week that she works.