Calculating Overtime

TBHRPRO · May 2004

Our company has a current policy of using holiday hours and vacation hours when calculating overtime. We are looking at possibly changing that to using only hours worked. Can you tell me if your company calculates overtime by including holiday and vacation hours, or only on hours worked.

HRGuyMS · May 2004

The FLSA does not require you to use holiday and vacation hours for overtime calculation, only hours actually worked. Our company follows the FLSA and uses only hours worked in excess of 40 to pay overtime.

marc · May 2004

Yes, just the hours worked here.

lnelson · May 2004

We calculate by hours worked only.

System · May 2004

If your company is in the health care industry and overtime is optional or voluntary, you'll especially have difficulty getting someone to work it for straight time. If you make the overtime mandatory, you'll have a morale problem. You can make a 'call in' policy that will pay overtime regardless of hours worked.

Shadowfax · May 2004

It's certainly not uncommon to pay Holidays at a different rate, but why conmpound the expense by taking a double whammy and using it to calc o/t? But, vacation? Wow! I'll bet you have a lot of loong time e/ees. If there is a reason for the policy, then keep it - if not, consider changing. However, if they've come to expect it, and, if it is a big part of comp, they will of course be unhappy.

System · May 2004

Shadowfax, we're actually a local government. The only thing we exclude from the overtime rule is sick time. No one calls out sick in a pay period with a holiday. I came from the health care industry, and no one would sign up for extra hours unless they were getting overtime pay. Yes, it was an added expense but the trade off was having a full staff and better morale. The turnover was less than with our competitors. I think each entity has to figure out what works for them.

Shadowfax · May 2004

In our area, the oonly turnover is folks going from the privaate sector to the governmtl because the benneys as somuch better. But, ain't no one I know of payin o/t based on unworked hours. I suspect that is a reason you have no turnover. I constantly bitch when government wages and bennys are so far out in front of private sector, private sector trains all the good emp/ees and they skip to government. And, as a taxpayer, I'd be might unhappy to find my tax dollars are going out the door so quickly. I understand government must compete for employees. But, it shouldn't raising the ante at the expense of private business.

System · May 2004

We do have turnover. Our wages are lower. The under 35 group leaves to get higher wages. The over 35 stick around because retirement is better than 401 (k) plans. You'll be happy to know that last fiscal year, we stopped paying 100% of the ee's group health. The taxpayer is now only burdened with 85%. EE's had a fit, but I was told to find $52K in benefits and cut it. Next year it may be 75% coverage. We're working on it. Any 24-hour operation (private health care or government) has a problem of recruitment and retention. We can't compete with M - F private sector operations.

smaces_twin · May 2004

Hours worked only. Shadowfax brings up good points. Watch out if you change it. You better have a sound business reason that is communicated very well.

crawfod · May 2004

We're a City government and pay only for actual hours worked, following the FLSA and protecting taxpayer money, but a lot of private companies count Holiday/Vacation/Sick hours.

Financially speaking, your company would almost certainly save money if you don't count those hours, and you will probably reduce call-ins from those who would no longer get that extra half-time OT pay by taking off work another day.
But you will undoubtedly take a negative ER hit, because nobody likes to have benefits taken away.

Can you share why you are considering a change?

TBHRPRO · May 2004

We were looking at adding some sick leave days or converting to a PTO (with adding additional days)along with offering STD and company paid LTD. This subject somehow came up in the meeting. Our non-exempt employees have NO sick leave days, but the exempt currently will receive up to 6 weeks if necessary. I believe the idea of changing the OT calculation was in an effort to super fund the added expense for the sick leave and LTD.

crawfod · May 2004

Based on your reasons, my suggestion would be to analyze all non-exempt employees for the year 2003 and see how many received OT pay and how much in actual dollars your organization would have paid out under the proposed OT rule change.

You already know the ones with little or no OT pay will be fine with the rule change because they are receiving new benefits with no loss of income. But the ones with significant OT will not see the loss of certain income versus an unknown future benefit they may or may not ever use as being a good deal.

Your best win-win is not to change your OT policy and yet still provide the new benefits. Hopefully the math will come out such that Management will feel it can afford both. If not, you'll have to then decide what's in the best overall interest of your entire workforce. Good luck.

hhaynal · June 2004

Private mfg company where we actually do count holiday and vacation hours when computing overtime. But not sick time or time off on disability etc.

mushroomHR · June 2004

We're a private manufacturing company as well and we count vacation, personal, and holiday time when computing overtime. Yes it would cut down on expenses and probably absenteeism but things here will never change.

E Wart · June 2004

We're a private manufacturing company as well. I have learned that paying for all time off in manufacturing is the norm. (However, I personally think it is crazy for the company to do it.!!). We have vacation, holiday, personal time for non-exempt employees (as well as self funded STD). No overtime is paid on STD since no hours but only dollars paid.
Before I came they paid ot on time paid for jury, brevement, etc. Several years ago, I made a few changes. We still pay overtime for vacation and holiday pay. However, we stopped OT on other pay (personal time, berevement, jury, etc.) The personal time (16 hours a year) the supv. has no control on when taken. It was crazy that employee had "power" over when paid for this as well as OT. I can see that vacation OT would be the next to go, but not gotten into this yet. Employees were very upset about personal time OT and felt it was their entitlment. (Hard to understand how people think.) Holiday I can see because the company controlls this. However, can be hard to get folks to work "over time" when vacation involved if don't pay OT. (Again entitlment thought process.) I still would like to get PTO in and address some changes then. (I have worked under PTO and love it for all.)
E Wart

MrCreosote · June 2004

We count hours worked plus Holidays toward OT, but not Vacation or sick time. When I started they counted everything, but we reduced it. I wanted to take out Holidays, too, but was not able to. The rationale was that Holidays are set by the employer so it wouldn't be fair to "take away" overtime. With Vacation, typically, people would work extra hours to cover their absence so we ended up paying for the time off plus a little extra.

Calculating Overtime

Comments