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Overtime Question

Our company is based in New Jersey (65 employees). All of our non-exempt (hourly) employees are scheduled to work 8 hours per day. We provide our employees an hour long paid lunch break within that 8 hour shift. Presently, we are not tracking when our employees take their lunch breaks, we are just tracking their time in and out. Per my understanding, FLSA considers overtime any hours worked over 40 hours in a workweek. So technically our employees are only working 35 hours per week. So if we scheduled our employees to work 9 hours per day, with a one-hour paid lunch built in (which would come out to be 45 hours per week), we could pay these 45 hours all at straight time as opposed to 40 hours of straight time and 5 hours of overtime. Is this correct? Or is a paid lunch break considered to be “hours worked?” Thanks in advance for your help.

The federal Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. Any company/organization with annual dollar volume of sales or receipts of $500,000 or more is considered a covered enterprise under the FLSA.

Under the FLSA, employees are either non-exempt or exempt. Non-exempt employees must be paid for all hours worked and are subject to overtime and minimum wage requirements prescribed by the FLSA. Conversely, exempt employees receive a fixed predetermined salary and are excluded from overtime pay provisions.

Non-exempt employees must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. Overtime must be paid for only hours actually worked above 40 hours. Since the employees’ lunch breaks are not hours worked, the time can be paid as straight time.

In the example provided, employees scheduled to work 9 hours per day, one of those hours being a lunch break, for five days a week would work 45 hours, all of which could be paid as straight time. If an employee works an extra hour one day for a total of 46 hours worked, 45 of those hours would be paid as straight time and one hour would be paid at the appropriate overtime rate.

Keep in mind, if an employee performs work duties during his lunch break, the time is compensable under the FLSA. Thus, it must be counted towards the employee’s overtime entitlement for the week.

So, before implementing the schedule change, consider how likely employees are to work through their lunch breaks. Answering a call on occasion doesn’t necessarily entitle the employee to compensation for the full hour. However, an employee who doesn’t leave their desk and answers calls/emails throughout the duration of the meal period or an employee who is on call during his meal period and receives so many calls he cannot use the time effectively for his own purposes are considered to be working. The time would be considered hours worked and count towards the calculation of overtime.

This entry was posted on Thursday, July 16th, 2015 at 7:00 pm and is filed under
Compensation, Labor Laws.
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