Businesses with a large number of hourly workers often struggle with the regulations surrounding overtime pay. It remains a complex process that siphons the productivity of an HR team, or even managers at smaller companies. The fact that these regulations vary by state only adds to the complexity for organizations with branches in multiple regions. Nevertheless, the risks of falling out of compliance remain too important to overlook this critical issue.

Understanding the details of overtime regulations needs to be on the shortlist for managers and HR professionals. This information influences the process of determining who qualifies for overtime and affects offering salaried positions versus hourly roles. Once again, if your agency or its client’s business spans multiple areas, successfully managing regulatory compliance becomes more challenging.

Let’s examine the rules surrounding overtime eligibility for modern business. Use these insights to ensure your agency and clients stay in compliance. We also explore how leveraging a state-of-the-art time-tracking solution helps manage this critical process. It’s the right approach for eliminating the risk of fines and tax penalties for non-compliance.

Who Qualifies for Overtime Pay?

Federal Overtime Regulations are Part of the Fair Labor Standards Act (FLSA)

Notably, federal overtime rules are embedded as part of the government’s Fair Labor Standards Act (FLSA). Simply stated, they require non-exempt employees to receive higher pay for time worked over 40 hours per week. The hourly rate for overtime pay is equal to one-and-a-half times their normal pay. Additionally, overtime is not required for time worked on weekends and holidays, unless the weekly total exceeds 40 hours.

All overtime regulations are based on a 168-hour workweek, i.e., 7 days of 24 hours each, irrespective of the calendar week. In fact, some businesses keep different groups of employees on their own weekly schedule. For example, this alternate workweek might span from Tuesday to Monday.

Overtime pay is received on the same paycheck for that period; companies don’t cut a separate check. The FLSA outlaws the of averaging of hours over two or more workweeks to reduce overtime pay. Your clients need to keep these parts of the federal overtime regulations in mind when creating schedules for employees.

Salaried employees are generally exempt from receiving overtime pay. As noted earlier, this influences businesses’ staffing efforts, as they determine the type of offer made to candidates. Deciding between a salaried role or one that qualifies for overtime pay obviously influences any hiring process. Providing your clients flexible employment options, combined with a deep understanding of FLSA regulations, helps their payroll compliance.

Remember that Overtime Laws Vary by State

As noted earlier, overtime regulations vary by state. For example, a few states calculate overtime pay based on the number of hours worked each day. In states with no separate overtime regulations, the federal regulations remain in force. In regions where both state and federal regulations overlap, workers receive the higher pay of the two.

Once again, managing payroll compliance at companies with multiple branches becomes exceedingly complex. This is especially the case for businesses lacking a large HR or accounting team. If your agency provides contingent workforce management services, you understand the importance of leveraging a top-shelf time collection application. Your clients may also benefit from using a similar tool to ensure compliance with the array of overtime regulations. We explore that topic in more detail later.

Accurate Recordkeeping remains Critical for Overtime Regulation Compliance

Your agency and clients need to maintain accurate records to stay in compliance with the FLSA overtime regulations. This data includes demographic information on each worker and their employment status. Obviously, details on everything related to the time worked and pay grade must also be recorded.

This info includes the day/time each employee’s workweek begins, their overtime exempt status, hours worked, pay rate, and more. Historical payroll records also need to be maintained for at least three years, according to the FLSA. While the federal government provides some flexibility on timesheets, a manual process makes little sense.

Manually tracking payroll data simply increases the risk of errors while reducing the efficiency of your accounting/HR staff. Of course, any mistakes can also cause your business (or clients) to become out of compliance with FLSA regulations. Needless to say, the subsequent fines and tax penalties hamper the profitability and future success of any business.

In this situation, leveraging a state-of-the-art time collection solution simplifies this process while lowering its risks. These tools reduce the complexity for staffing agencies and their clients, especially businesses located in more than one state. Let’s take a closer look.

A Modern Biometric Timesheet Solution for Managing Overtime Compliance

The experts at Timerack offer staffing agencies and their clients a state-of-the-art solution for time tracking. This solution simplifies workforce management while improving accuracy and making payroll compliance a much easier process. It also offers a straightforward approach to timesheet management and record retention.

Need Time-Tracking Solutions?

The application supports the customization of overtime calculations based on both federal and state regulations. The previously mentioned businesses with locations in multiple states would absolutely benefit from this useful, cost-saving feature. Connect with our experienced team at your earliest convenience to schedule a demo of our solution.