Hours Worked

FunHRBanker

A person works Monday through Saturday. They are paid a flat rate of $100 for the Saturday. If the hours wouldn't have put them into overtime (and if they did, the flat rate is more generous than time and a half), is this acceptable? Could the employee come back and say they weren't paid for the hours they worked and say it was also overtime?

I'm talking myself in circles today!

ritaanz

Why would you just not pay time and half for all hours over 40?

FunHRBanker

That was my thought, especially since it's a lot less than the flat rate! I was having this conversation with another member. Can they continue to pay the flat amount without the possibility of someone alleging they were not paid for their hours worked?

ritaanz

Is there a time card showing working on Saturday? Is the $100 paid through payroll?

FunHRBanker

I believe the answer is yes to both.

ritaanz

[font size="1" color="#FF0000"]LAST EDITED ON 09-12-07 AT 08:02AM (CST)[/font][br][br]IMHO, I do not believe this is a good business practice. I am assuming that this is being done to get employees to work on a Saturday,kind of like a bonus. I would be curious as to how it is coded on the pay stub.

FunHRBanker

I completely agree. I'm encouraging them to pay for hours worked then add a smaller bonus if they want ($50 rather than $100).

Dutch2

Are you still tracking hours worked on Saturday? I would suggest you have some way to prove beyond a doubt that the ee's were paid at least equal to if not in excess of time and a half for all hours over 40. Have you considered offering a premimum pay rate for Saturday (an additional $$ per hour) as an incentive and then just continue paying by the hour?

FunHRBanker

I've suggested a flat rate bonus in addition to the hours, but a shift differential would be a good idea too (a bit of a pain to calculate OT, but oh well)!

Thanks.

System

If the $100 is paid such that it is designated as pay for hours worked (especially if it is designated in particular as pay for Saturday hours), then I don't think the company is risking anything here, provided it tracks the hours worked on Saturday.

For example, if an employee's hourly rate is $10/hour, and he works 40 hours during the week and 5 hours on Saturday, then the employee's paycheck for that week must total at least $483.33 (read on if you're puzzled as to why it's not just $475). Since, under your system, you'd be paying the employee $500 for that week, the employee would have no claim for nonpayment of wages or failure to pay overtime, because he received at least the amount to which he was entitled for the number of hours he worked. It doesn't matter that his pay was based on a flat rate for one of the days as opposed to a hour-by-hour calculation.

Of course, this only applies if it is certain that an employee would not be entitled to more than $100 as a result of the Saturday work. According to the information in your post, that seems to be the case. However, in my example, if an employee worked 40 hours per week at $10/hour and then 8 hours on Saturday, he would be entitled to $520, so the $500 wouldn't be sufficient.

Still, it's unclear why you would want to pay employees this way. This system complicates things if you do end up paying overtime to an employee. Overtime must be paid at one and one-half times the employee's "regular rate of pay." This includes not only the employee's base hourly rate, but also the amount of any bonuses, longevity pay, shift differentials, etc. So if the employee earns overtime in a week in which he earns his $100 Saturday pay, that $100 has to be factored in to calculate the regular rate, which could then inflate that rate. For example, using the above example, the computation for an employee who works 40 hours Monday through Friday, then works 5 hours on Saturday would have to be based on 40 hours at $10/hour, and 5 hours at $20/hour (100/5). That means that the regular rate of pay would be ((40*$10) + 5*$20)) / 45, or ($400 + $100 )/ 45, or $11.11/ hour. Which means that the employee would be entitled to $16.67 for each hour worked over 40, rather than $15. I suppose that doesn't matter if you're paying the employee $100 for Saturday anyway, but it may change the analysis somewhat with respect to whether the $100 is always going to be more generous than the amount the employee would get at the overtime rate.

FunHRBanker

Great illustration missk, thank you! I continue to recommend to this new HR person that they employees should be paid for the hours worked. If they want to encourage people to volunteer for Saturday work, pay a "bonus" in addition to the hours. If they were entitled to overtime, would you have to include the bonus as part of the calculation?

System

Yes, nondiscretionary bonuses (such as the bonuses you're proposing) must be included in OT calculations as well.