Guide to Overtime Pay, Policies and Rules

Two basic tests can initially tell you whether your employees are entitled to the extra pay. If you answer "yes" to one or both of these questions, you must pay overtime (but you could still be on the hook for this expense even if your business doesn't fit into those categories):

1. Does your business generate at least $500,000 a year in revenue or provide medical or nursing care?
2. Are your employees engaged in interstate commerce, where the goods or services they provide are delivered or performed out of state? (Included in this category is a broad range of jobs, including factory, secretarial, administrative and janitorial work.)

Tips & Tactics
Helpful advice for making the most of this Guide

• Don't treat overtime as a benefit. It should only be authorized when market conditions warrant.
• Develop staggered work schedules where weekly shifts for employees begin on different days.
• Discourage the practice of unreported work hours, where an employee comes in early and leaves late. While some people would say that is the sign of a "good employee," it may create a rift within your staff and make your business a target for a labor violation complaint in the future.
• Refrain from cutting special deals or making individual arrangements to avoid paying employees overtime. Under federal law, employees cannot waive their rights to receiving overtime nor can they agree to be paid at a lower wage.

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