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What Small Business Owners Should Know About Overtime Laws

The Fair Labor Standards Act (FLSA) currently governs overtime laws, while the Department of Labor (DOL) administers them. But are you aware of which of your loyal employees should be exempt from overtime? If you have yet to consult a business lawyer in Utah, below are some basics regarding the current laws, how to comply, and the potential risks of not following the rules.

Current Overtime Laws

Current laws regarding overtime details the specific conditions that set out when an employee should be paid overtime, how much an employee should be paid, and which employee classifications are exempt from the overtime rules.

Laws state that employees in the non-exempt category should be paid overtime for all hours they have worked beyond the typical 40-hour workweek. The amount should be no less than time plus half of an employee’s pay rate.

Employees could work as many hours of overtime, provided that they get paid accurately. A workweek is basically any fixed and consistently recurring period spanning 168 hours or seven successive days. This means that all the times that a non-exempt employee worked within that period should be paid accordingly.

Which Employees Are Exempted from Overtime Laws?

The laws stated above concerning overtime pay is clear enough, but which employees are exempted from the rules? The DOL maintains a couple of classifications for employees exempt from overtime rules.

Exempt employees are those that can work more than 40 hours but are not legally entitled to overtime pay. The exemption that usually applies to businesses of all sizes involves professional, administrative, and executive employees. This means that for an employee to be considered exempt from overtime pay, he or she should meet other requirements dependent on which category an employee falls into.

What Happens if Your Business Does Not Comply with Overtime Laws?

exhausted employeeThe most significant risk that an employer could face for non-compliance comes from lawsuits filed by employees, which could be very costly and damaging to your business. If you violate the FLSA overtime laws, you might be ordered to pay back all owed overtime hours and a penalty referred to as liquidated damages that is the equivalent of the back pay you owe.

Imagine how much you would need to pay if you did this for more than one employee and for an extended period of time? You could also be facing as much as $10,000 in fines or even time in prison for repeated and multiple violations.

Then There are State Laws to Take into Account

It is very crucial to note that the overtime laws mentioned above are only federal minimums, and that plenty of states do and can employ stricter overtime rules. This means that depending on where you live, you might need to pay more for overtime.

Otherwise, you could face penalties from not only the FLSA and DOL, but your state government, too. The bottom line is that as long as you understand, are always updated, and comply with overtime laws, you do not need to be worried.