There are requirements and stipulations for employers to meet regarding employees who are paid a minimum wage. This includes how overtime pay is determined
What is the Minimum Wage?
The federal minimum wage is the lowest hourly amount of pay that employers are allowed to pay their employees. Ever since 2009, the federal minimum wage limit has been $7.25 per hour. However, that amount may be lower for minors. Also, employees who make tips as part of their job must be paid at least $2.13 an hour, in addition to their tips. If the amount of tips they receive does not add up to the federal minimum wage amount, the employer must compensate them for the difference. In some states, the same rule applies to individuals who work at commission-based jobs.
Under the Fair Labor Standards Act, employers are allowed by pay a minimum of $4.25 to employees under the age of 20 if certain conditions are met. Therefore, just because an employee is under 20 years of age does not necessarily mean that the employee will be subject to the youth hourly minimum wage. Additionally, even if an employee does fall into the youth minimum wage category, the employer can only pay the employee that amount 90 days from the date that the employee began employment with the employer or until the day that the employee turns 20 years old, whichever event occurs first.
Provisions for overtime time pay are contained in the Fair Labor Standards Act (FLSA). To qualify for overtime pay, an employee is paid on an hourly basis and must earn less than $455 per week. These workers are considered non-exempt.
Non-exempt employees must receive overtime pay for hours worked over 40 in a workweek at a rate not less than one and one-half times their regular rate of pay. There is no limit to the number of hours employees aged 16 and older may work in any workweek. The Act does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, unless the hours worked has exceeded the 40-hour workweek limit. Youth employed under the youth minimum wage rate may still be paid for overtime as long as they work more than the standard 40-hour-per-week work week.
A workweek need not coincide with the calendar week, but may begin on any day and at any hour of the day. Different workweeks may be established for different employees or groups of employees. Averaging of hours over two or more weeks is not permitted. Normally, overtime pay earned in a particular workweek must be paid on the regular pay day for the pay period in which the wages were earned.