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“Since many employers pay overtime based on more-generous standards than [those found in the] FLSA — either based on state laws, collectively bargaining agreements or employer policies — overtime is not always calculated based on FLSA standards,” he said, adding payroll systems will need to be updated to identify and track the portion of overtime paid that is FLSA-qualified to correctly determine deduction eligibility.; ;Methods need to be in place to track qualified tips based on occupation-specific guidelines.

It also doesn’t require overtime pay for work on Saturdays, Sundays, holidays or regular rest days, unless (of course) actual overtime is triggered when working on such days.

Pitfall #3: Miscalculating Overtime Paying overtime correctly for tipped workers can be complex, and many employers fail to do so.

Within “productivity,” work time and overtime are foundational metrics to track.

Managers then redistributed these tips to nontipped employees, including kitchen staff.; ;Failed to pay tipped employees the federal minimum wage of $7.25 per hour.; ;Incorrectly paid tipped employees overtime based on the tip credit rate instead of the applicable minimum wage rate.; ;Failed to keep accurate records of employees’ hourly rates of pay and overtime wages due.; “If an employer claims the tip credit, tips may only be shared by employees who customarily receive tips as part of their wage compensation,” stated Mary O’Rourke, a Wage and Hour Division district director in Michigan.

., failing to pay tipped employees the federal minimum wage or pocketing workers’ credit card tips); ;Don’t pay overtime (i.e., failing to pay overtime based on the regular hourly rate or failing to pay overtime that includes service charges, commissions and bonuses); At the federal level alone, in 2024, the U.S.

DOL investigators discovered the employers violated the Fair Labor Standards Act (FLSA) for years by: Willfully failing to pay employees for all hours worked, including work done during meal breaks;;Failing to incorporate all promised compensation, including nondiscretionary bonuses and shift differentials, when calculating overtime pay;;Avoiding paying overtime by incorrectly treating employees as exempt from the FLSA’s overtime requirements; and;Not keeping accurate records of hours employees worked and compensation due for those hours.; Editor’s Note: Additional Content For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics: Employee Benefits;Employee Compensation;Total Rewards;Finance and Budgeting; You have to login to perform this action.

Percent Between Midpoints = ((Midpoint of Higher Grade - Midpoint of Lower Grade) / Midpoint of Lower Grade) x 100 Overtime Cost to Total Compensation Ratio Measures the ratio of overtime costs to total compensation expenses, indicating reliance on overtime pay.

Most prominent are: ;No tax on overtime.

.; ;No tax on overtime hours.