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December 22, 2017 | HR Compliance | Posted by Ascentis Thought Leadership

Do You Know How to Perform Overtime Exemption Tests Under FLSA Regulations?

The first way employers make risk non-compliance with overtime calculations is through unintentionally confusing pay period hours with work week hours. Overtime for non-exempt hourly employees must be calculated based on a specific seven day period of time regardless of how frequently the employees are paid. If, for example, an employee worked 50 hours in week one and 10 in week two, the employee would be due 10 hours of OT pay.

What are the penalties for non-compliance?

They can add up quickly, up to $1,100 for each violation, not including back pay. If an employee files a claim against you the agency is obligated to investigate and the burden will be on you to provide payroll records for at least three years and time-card records for at least two years for every single one of your employees. Bear in mind, a complaint can be filed by any employee current of former for up to two years or longer if the violation was deemed willful.

Payroll departments often mistake that setting a salary for an employee means that the exemption clauses protecting that employee’s right to overtime pay are satisfied, when it alone does not. In order to classify an employee as exempt from overtime, that employee must meet specific requirements set forth by FLSA regulations. The FLSA requires that most employees in the United States be paid overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. This does not apply when employees fall into one of the exemption categories set forth in Section 13(a)(1) of the FLSA.


With more than 35 years of experience in providing Software as a Service (SaaS) solutions, Ascentis thought leaders have become a respected source for insights, tips, and innovations in the Human Capital Management (HCM) space.