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Preventing unpaid overtime claims

Employers can often mistakenly underpay workers for the overtime that they worked. This can be often due to the misclassification of employees and what that means for the wage that they are owed.

The following tips are some of the most efficient ways to make your company processes sound enough to prevent unpaid overtime claims from occurring:

Make sure you have an employee classification process in place

When any new employee starts at the company, it is vital that you make sure he or she is classified correctly. This will determine whether they are exempt from overtime laws.

If the worker is paid a salary that is fixed and regular, then it is likely that they will be exempt from overtime laws. In addition, an employee will be classed as exempt if he or she has executive, managerial or administrative positions.

If an employee is paid on a per-hour basis and does not have a steady amount of work, it is likely that he or she will be eligible for overtime pay.

Make sure that overtime is calculated correctly

If an employee has a standard base rate with no compensation terms, it should be very easy to compute pay with overtime. Overtime is 150 percent pay for every hour worked over 40 hours in any work week. However, if the employee is subject to compensation or bonuses, you should be careful to ensure that his or her overtime is paid correctly.

Preventing unpaid overtime lawsuits can save your company a great deal of money and stress. It is a good idea to invest in good processes in order to successfully prevent overtime payment errors.

Source: Business Management Daily, "Overtime labor law," accessed March 16, 2018

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