Are companies required to pay a premium to employees who work overtime or during holidays?
Not necessarily. Under the federal Fair Labor Standards Act (FLSA), only covered, nonexempt workers are entitled to overtime pay at a rate of not less than one and one-half times their regular rates of pay after 40 hours of work in a workweek. Employees who earn certain levels of income and who are engaged in certain duties (such as bona fide executive, administrative, professional, and outside sales employees) are generally exempt from overtime pay. Most states follow the FLSA regulations, with only California, Nevada, Wyoming, and Alaska requiring that overtime for nonexempt employees is due after 8 hours per day (as opposed to after 40 hours per week)
Generally, hours worked on holidays and weekends are treated like hours worked on any other day of the week. There is currently no law that mandates an employer pay an employee a special premium for work performed on these days other than the overtime premium required for work performed in excess of 40 hours in a workweek (or 8 hours in a workday for a few states). A question of overtime often arises when an employee receives a paid day off for a holiday during the week but then must work on Saturday. The answer is that the employee is not entitled to overtime pay for work done on that Saturday unless the work brings the employee in excess of 40 work hours for that week. Whether overtime pay is due for holiday work is based on the number of hours worked for that week and not on the pay received
Premium pay is a generic term referring to additional pay (not necessarily overtime) given to employees for night, holiday, or Sunday work. Extra or incentive pay for night, holiday, or weekend work must be agreed upon by the employer since it is not federally regulated. However, if more than 40 hours are worked within the workweek, the employer must follow overtime regulations
The FLSA has no requirement for double-time pay. The only state with double-time regulations is California, which requires all employers to pay double time for an employee who works in excess of 12 hours in a single day or in excess of 8 hours on the 7th consecutive day in a workweek. While employers may not be required by law to pay double time, if an employer has a collective bargaining agreement or other policy stating that employees will be paid double time for certain work, then the employer is obligated to pay employees as required by the agreement. For example, a union contract may require an employer to pay an employee double time for all work done on a holiday or Sunday regardless of the total number of hours worked in a week
Individual states may differ on overtime exemptions. When the state laws differ from the FLSA, an employer must comply with the standard most protective to employees. Employers should check with their state's Department of Labor with regard to overtime standards. A list of all states and their labor office contact information can be found at: http://www.dol.gov/esa/contacts/state of.htm.
Helen M. Kemp, Division Counsel and Assistant Director, Retirement and Benefit Services, Office of the State Comptroller, State of Connecticut
Learn more about overtime