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How do you calculate straight time overtime for exempt employees?

Our employees have to work 40+ billable hours in a week to be paid overtime. Right now we are adding Holiday time into that bucket but not PTO or Admin time. There has been questions as to why not add the PTO time in also. Comments or suggestions?

Answers

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

I'd suggest you talk to a labor attorney in your state. If an employee takes 2 days PTO (assume an 8 hour work day) and then works, 9, 10, 9 days in a work week, that amounts to 44 hours of employment in my view.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Len, sorry my friend, but according to the US DOL, you have to work over 40 hours in a work week, and PTO doesn't count (I initially thought you correct; learn something everyday!).

Here is the definition of what "work" is, according to the DOL"
http://www.dol.gov/whd/regs/compliance/whdfs22.htm

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Good point Wayne, thanx!
I guess my real question is, apart from legal compliance, what are the company values and culture. I look at it and say, if the employee had worked those first 2 days instead of being on PTO, they would have earned the 4 hours OT. Unless there is an abuse issue, what's wrong with paying the OT even in a week where an employee takes PTO?

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

I have an issue paying an employee OT in a week they take PTO (assuming the reason was in their control). It's abusive on every level. Poor planning, execution, etc.

Obviously out of their control is a different issue, as previously stated.

Anonymous
(Business Manager) |

In these instances instead of paying the employee Overtime I have always reduced the amount of PTO they were charged for that week
.

Kathleen Nichols
Title: Accounting and Financial Analyst
Company: Leading Edge Companies, LLC
(Accounting and Financial Analyst, Leading Edge Companies, LLC) |

Many places don't allow PTO for an employee to reach over 40 hrs in a week, that is, you can only have PTO on a timesheet that has less than 40 hours actually worked. If someone works on a Holiday - they get 8 hours holiday pay and whatever hours they worked too (could be straight time, could be OT, depending on if they actually worked over 40 hours - not holiday or PTO time, those are hours one is not working).

Charles McCormick
Title: CFO
Company: UltraVision - Dr Tomy Starck, MD PA
LinkedIn Profile
(CFO, UltraVision - Dr Tomy Starck, MD PA) |

Dear Anonymous,

PTO is comp time, not worked hours and would therefore never be included in calculating overtime for a given week. Only hours actually worked count towards OT. Depending upon your timekeeping system, marking the accumulation and use of PTO needs to be accounted for separately from worked hours, etc.

If you are a smaller shop and using a spreadsheet, I would be glad to help you.

Best,

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Interesting discussion. Some companies are blending vacation, sick pay etc into a single PTO number, so I guess in that case, comp time is not included because it usually can't be measured in advance. What happens if your company blends it all together? Does that mean 2 days PTO followed by 3 days with more than 8 hours work would create an OT liability?

Paula Batzer, MBA
Title: Accounting Manager
Company: EFULFILLMENT SERVICE INC
(Accounting Manager, EFULFILLMENT SERVICE INC) |

OT is paid based on 1 1/2 times for non-exempt (hourly) employees for 40+ hours actually worked. Unless the non-exempt employee worked 40+ hours, then no OT is paid even if PTO time is added. PTO would be treated the same way vacation/sick pay/personal is paid and not counted for OT.

Ken Mason
Title: Controller
Company: Pascua Yaqui Tribe
LinkedIn Profile
(Controller, Pascua Yaqui Tribe) |

I think Paula's answer provides an excellent clue to addressing the question, which was "How do you calculate straight time overtime for exempt employees?"

You don't calculate overtime for exempt employees, as they are exempt from overtime calculations by definition. If there is a desire to compensate them for over 40 hours worked, then a re-think of their classification is in order.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Or, give them a bonus/comp time.

Ken Mason
Title: Controller
Company: Pascua Yaqui Tribe
LinkedIn Profile
(Controller, Pascua Yaqui Tribe) |

Sure, if it's within established policy and is applied equitably.

Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

Ken:

+++++

You are right.

My gut tells me the OP was thinking OT for a non-exempt, full time position.

We often encounter that situation because, although most of our administrative staff is "salaried" they are "salaried non-exempt" and, we are obligated to pay OT. Or offer "comp time" in lieu of. Only us poor schlub "salaried-exempt" folks are excluded.

Also, although many here refer to the federal DOL, don't forget state law which can be more restrictive. I know in many cases, California law is.

Then throw collective bargaining agreements into the mix and you know how complicated it can all become. Particularly when you have employees that fall under each of these statutes, depending on class, location, etc.

Ken Mason
Title: Controller
Company: Pascua Yaqui Tribe
LinkedIn Profile
(Controller, Pascua Yaqui Tribe) |

Dear CFO, I'm there with you, having operated for years under CA law, including at a newspaper with seven unions, some of which had negotiated 35-hour work weeks. All these complications were why we had three employees in Payroll for 700 (which fell to 500) employees.

Paula Maietta
Title: Human Resources Manager (Temp position)
Company: The Westin Verasa Napa
(Human Resources Manager (Temp position), The Westin Verasa Napa) |

First you need to determine if they are exempt or non-exempt employees. For the overtime, if they are non-exempt I don't see a problem if you want to add the holiday in and not PTO, since that is at the company discretion. They way we usually calculate commissions employees for overtime is an average rate paid for the month as long as it is one and one half time the minimum wage. The problem I see is not adding Admin time...if they are non-exempt employees you must add the admin time even if it is not billable hours. You can have a separate rate for employees admin work. Example, if the minimum wage is $8.00 per hour, you can pay them minimum wage for administrative work that is not billable. And another thought, why aren't the admin hours included as billable since the admin work is part of the work usually needed for the client...just a thought.

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