Why It's Important to Pay Your Employees' Overtime According to the State In Which They Live

Why It's Important to Pay Your Employees' Overtime According to the State In Which They Live

All employers have to worry about whether to classify employees as exempt or non-exempt for payroll purposes. Some may also have to worry about how laws may vary by state. Many employers classify employees as exempt to get out of paying overtime, and this is a common violation of federal law. 

According to the Fair Labor Standards Act, you can only classify an employee as exempt if they meet certain criteria, such as minimum salary requirements and specific job categories. In addition to the FLSA, many states have their own set of wage requirements and laws, and employers must abide by both federal and state law to stay compliant.

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What is Mandatory Overtime?

Mandatory overtime is overtime you are requiring of a worker, perhaps to cover for other staff. It's also called forced overtime. If you have negotiated overtime with your employee, this is called voluntary overtime.

Overtime must be paid at a rate of at least one and a half times the employees' normal hourly rate. While mandatory overtime is legal, it is often unpopular with employees (and their families) and may be best avoided if possible.

You do not need to pay extra for work that takes place at night, on weekends, or holidays. This is with regards to federal law. However, some states have different overtime laws.

Different States Have Different Overtime Laws

One thing a lot of companies fail to realize when they start having employees in other states is that the labor law governs their employees in the state in which they work. While some states have no overtime laws (in which case federal law applies), others may apply more stringent overtime requirements. The FLSA expressly allows them to do this.

If a state has more lax overtime laws, then federal law applies unless the FLSA does not cover the employer. One common difference is that Federal law applies overtime limits only to a workweek, allowing for flexible schedules such as three and four-day workweeks. Some states, however, have daily overtime requirements.

In California, employees must be paid overtime for any hours over 8 hours in a day, and double time if the hours worked go over 12 hours. The point of these laws is to discourage long shifts. California also has rules mandating overtime if employees are forced to work all seven days of the week.

States may also have differences in classifying employees, and again, you must abide by the more stringent/employee-favorable application. This sometimes means that industry exemptions don't apply in certain states.

This is so complicated that some companies resort to applying the most stringent requirements across the board. However, this is not always favorable to the employer.

Instead, it's better to apply payroll state by state and handle things differently for each employee. Because this is so complex and variable, outsourcing payroll may be the easiest way to handle things when you have a number of workers in different states. This also helps with other complexities, such as state income tax withholdings in multiple states. 

Mandatory Overtime FAQs

Still a little confused about mandatory overtime? Here are a few FAQs:

Can You Require Overtime?

Legally, you can require overtime without breaking any federal laws. No states have banned mandatory overtime.

Is There a Limit To How Many Hours of Overtime I Can Require?

Generally speaking, no. There are limits for employees under 16 as well as certain high-risk professions. However, there are a few state laws that require rest periods or days of rest. In California, employees must receive at least eight hours free from work between shifts, unless the total time worked is 13 hours or less (this is intended for split shifts). This effectively limits the number of hours of overtime you can require.

Can You Discipline an Employee For Refusing to Work Overtime?

Yes. You can discipline or even fire an employee who refuses to work overtime unless they demonstrate a threat to their safety and health. In some states, there are maximum hours over which an employee cannot be forced to work overtime (but may do so voluntarily).

Can You Make an Employee Work Overtime Without Notice?

Yes, including working a full second shift. However, this tends to result in higher employee turnover if it happens too often and is best reserved for emergencies.

If you have multiple state laws applying to your employees, then working with a PEO is a great option. They use an HRIS to automate overtime compliance, with the system pulling the employee's location from their address and applying the required rules to their paycheck. Execustaff can help you outsource and automate all of your HR. Check out our blog for more information.

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