What do HR Managers Need to Know About Overtime Laws?

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overtime-lawsOne of the most important aspects of a human resource (HR) manager’s job is making sure that the company that they represent is in compliance with labor regulations that include overtime laws.

Overtime is typically defined as time worked by employees that is over the regular 40 hour work week. Production and manufacturing businesses have traditionally benefited from the overtime option, but the national shift from a manufacturing based economy to a more service oriented one has brought the issue of overtime in service businesses to the legislative limelight.

The nation’s Fair Labor Standards Act is the basis for all laws pertaining to overtime, but HR managers must be cognizant of both federal and state statutes regarding the use of overtime in order to help their companies to avoid costly fines, penalties and bad publicity.

Here are some of the trending issues regarding overtime regulations for which HR managers should be aware.

Not Too Small To Fail At Overtime Regulation Compliance

Many labor laws require compliance that is deemed too stringent for small, fledgling companies. For example, small companies that have fewer than 20 employees can fill their available positions as they desire without regard to federally mandated civil rights laws concerning anti-discrimination. However, even these small companies must comply with wage and hour legislation concerning overtime.

The minimum standard that is required by the federal government states that a non-exempt employee must be paid one and a half times their regular pay per hour when they work over 40 hours per week. HR managers can consult their companies’ legal departments to properly define employee status of non-exempt and exempt. Exempt employees who currently are not legally entitled to overtime pay usually hold high level administrative, executive or professional job positions.

Restructuring of Overtime Regulations for Certain Exempt Employees

Many managers at companies are required to do more work with fewer skilled laborers because of cost cutting initiatives that began during poor economic times. These managers often pitch in to do tasks that are similar to their subordinates in addition to their managerial duties, but their pay may be constrained by their status as exempt employees. Other employees like teachers rack up plenty of overtime hours but are also considered exempt from overtime pay. New laws are being considered that would allow exempt employees who make less than a certain threshold annual salary amount to collect overtime pay. Savvy HR managers can prepare their companies ahead of time for these new labor related expenses with updated corporate policies regarding the use or restriction of overtime.

Ignored Legal Correspondence Incurs Costly Mistakes

Large companies usually have both HR managers and legal teams available to protect their interests concerning overtime issues, but a small business may be at a distinct disadvantage when it comes to responding to overtime related legal actions. A current or former employee who claims to have worked overtime and has kept proper records of their activities can file legal paperwork to recover their overtime pay. When a “request for admissions” is filed by an employee, the company for which the employee worked must respond to the request by either refuting or admitting that the employee’s claims are true. If the company fails to respond by the deadline set by the courts, it is often held liable for back pay of overtime incurred for up to three years.


Most companies value the contributions of their work force and do not want the reputation of cheating workers out of deserved pay. One of the ways that a company can show respect for employee rights and avoid costly legal penalties is to hire an HR manager who is knowledgeable about overtime laws and related issues.

See also: Is Your Job Killing You? (Infographic)