What Are My Obligations to Pay Overtime?

clock.jpgPaying employees properly is a primary responsibility for Minnesota employers. Not only does it reflect well on the company, it also prevents costly legal battles and protects workers’ rights.

That said, it is not necessary for employers to overobligate themselves by paying more than what they are legally obligated to pay. For instance, paying workers overtime may always be appreciated and may sometimes be required, but it is not always so. Knowing if and when you must pay your employees overtime can be one of the most complex issues an employer must address.

Backing up, there are both state and federal laws regarding overtime: the federal Fair Labor Standards Act and the Minnesota Fair Labor Standards Act. Both acts provide for when employers must pay employees overtime. However, there can be some confusion when it comes to compliance.

Below are a few examples of common questions that can arise.

  • Am I required to pay overtime? All Minnesota employers must pay eligible employees overtime under state law. Some firms must comply with the federal FLSA laws. As explained in this article, this includes employers involved in interstate commerce, companies with $500,000 or more in gross annual sales, as well as hospitals and schools. This distinction will make a difference when it comes to the hours an employee works.
  • Are my workers eligible for overtime pay? Not every person is eligible for overtime pay. If a worker is an independent contractor, for instance, he or she is likely not entitled to overtime pay. If the employee is exempt under state or federal laws, he or she is not entitled to overtime. Typically, exempt employees include executives and professionals meeting salary requirements as well as certain salespersons.
  • How many hours constitute “over” time? As mentioned above, there is a difference when it comes to the hours a person must work to be eligible for overtime. State law dictates that people working more than 48 hours in a workweek must receive overtime pay for additional hours. However, federal laws set the limit at 40 hours in a workweek. Therefore, Minnesota employers who are not required to comply with the FLSA do not need to pay overtime to employees working between 40-48 hours per workweek. Also note, that the 40/48 hours are based on a work week. You aren’t paid overtime for working 10 hours in a day, unless and until those extra hours break the cap when all the hours worked in the week are counted.

These questions and explanations represent a broad look at overtime laws and compliance in Minnesota. Because most cases are complicated, and because there are serious consequences for underpaying employees, employers would be wise to discuss with an attorney their specific legal obligations.

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