40 Hour Workweek
Q. Can you clarify whether we must pay employees overtime if their 40-straight-time hours include paid time off (PTO) and then they work above that 40 hours?
A. A very valid question that comes up more often than you think. Admittedly, as an employee during my high school years trying to determine whether I was entitled to additional pay during a busy workweek, I even struggled with this question. Starting with the basic overtime law under the Fair Labor Standards Act (FLSA), all nonexempt employees shall be paid overtime (time and one-half the employee’s regular rate) for all “hours worked” over 40 hours in a workweek. This means that, unless there is an employment agreement stating otherwise (with some exceptions in certain industries), all time when the employee is required to be on duty and when the employee is “suffered or permitted to work” counts towards the 40-hour workweek for calculating overtime purposes. Paid time off, like holiday pay, vacation, or personal days, are not “hours worked” for purposes of overtime pay, because the employee is not on duty or is not permitted to work.
Often, an employee will take eight hours of PTO for a personal day, work nine hours a day over the next 4 days (36 hours), and then question why he or she did not receive four hours of overtime pay for the week. While the employee’s paycheck will reflect that he or she was compensated for the equivalent of 44 hours for that week, eight of those hours were not “hours worked” under the FLSA. Only 36 hours were “hours worked” that week, so no overtime compensation was required to be paid for any hours that happen to put the employee above the basic 40-hour threshold for the workweek. Alternately, if the employee took the same one day (eight hours) of PTO and then was permitted to work 11 hours a day over the next four days (44 hours), he or she would be eligible for overtime compensation for the four hours actually worked during the workweek over the 40-hour threshold. Under the first example, the employee would receive eight hours PTO pay and 36 hours at the regular rate. Under the second example, the employee would receive eight hours PTO pay, 40 hours at the regular rate, and four hours at the overtime rate of time and one-half. Of course, an employer has the discretion to voluntarily pay all hours over 40 hours in a workweek at a higher rate, regardless of whether some of those hours were taken as PTO.
Jason R. Mau is an attorney in the Boise office of Parsons Behle & Latimer. He can be reached at 208-562-4898 or email@example.com.