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4 Costly Overtime Pay Pitfalls for Employers to Avoid

In the realm of employment practices, overtime pay is a critical and often intricate aspect that both employers and employees must contend with. While ensuring fair compensation for extra hours worked is essential, employers must also navigate a regulatory landscape filled with potential pitfalls. In this discussion, we will delve into four of the most costly overtime pay pitfalls that employers should be vigilant about, offering insights on how to avoid them. By understanding these potential traps and taking proactive measures, you can not only maintain compliance with labor laws but also foster a more harmonious and productive workplace.

When your non-exempt employee works more than 40 hours a week, you’re required to pay them 1.5 times their hourly rate of pay for the time over 40 hours. If the Department of Labor is alerted to incorrect payment of your employees, you may be subject to a slew of costly repercussions including paying fines, back wages, liquidated damages, attorney fees, and more. Make sure your organization isn’t at risk by avoiding these practices.

Overtime Pay Pitfalls

  1. PTO Instead of Overtime Pay Some employers engage in the practice of adding to an employee’s PTO or Vacation pay rather than paying appropriately for overtime hours worked. While this may seem like a reasonable trade, it is illegal under the Fair Labor Standards Act (FLSA). To protect your organization from an investigation and potential financial repercussions, review your company’s practices. 
  2. Misclassifying Employees FLSA provides guidelines for classifying your employees as exempt or non-exempt. Many employers are tempted to classify employees as exempt and pay them a salary rather than paying them correctly according to the duties of their role. Clear, well-defined job descriptions can help you navigate the proper classification of your employees are classified and paid correctly. Non-exempt employees can be paid a salary rather than an hourly rate, but are still eligible for overtime pay. For more information on making sure your employees are classified correctly, take a look at this fact sheet by the Department of Labor.
  3. Not Paying Travel Time You must compensate your employees for time spent traveling to and from locations they must visit to complete their job duties. The time they spend for their “normal commute” in the morning or in the evening is not eligible for this calculation. Protect your organization by taking a look at how your organization handles employees who travel to multiple work sites.
  4. Not Paying Unauthorized Overtime In some instances, employees may work overtime hours without approval from their supervisor. While many organizations have policies against this activity, it is unlawful to withhold overtime pay for unauthorized time. Achilles Group recommends coaching the employee to manage their workload and communicate with their supervisor prior to crossing the 40-hour threshold more effectively.

How to Get Help for Overtime Pay Practices

Houston business owners and executives come to Achilles Group to build a solid HR firewall and to equip their leadership teams with the philosophies, principles and disciplines they need to be effective and profitable. If you are not already a part of the Achilles Group family of clients and want to find out how we can help you, contact us at:

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Call at 281-469-1800

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