Labor is typically one of the more costly line items in a small business’ budget. As a business owner, you want to compensate your employees fairly and at a rate that is high enough to prevent them from seeking employment with one of your competitors. At the same time, however, you need to keep an eye on your operational costs. This can get particularly complicated when overtime pay is concerned.
Federal Overtime Laws
Laws exist at both the federal and state level to mandate the payment of overtime to certain employees. Currently, employees whose take home pay is $684 or less on a weekly basis is eligible for overtime when these employees are required to work more than 40 hours in a single week. Overtime payments are to be calculated at a rate of time-and-a-half. Salaried employees are not eligible for overtime pay under these guidelines, and employees whose annual pay exceeds $35,568 a year are evaluated on a case-by-case basis. Workers who perform administrative or executive duties are also exempt from this ruling.
State Overtime Laws
Most states use the 40-hour weekly standard as well for determining overtime eligibility. In practice, this means that an employee who works 12 hours in a single day three times a week will not be eligible for overtime even though 12 hours is well over the accepted eight-hour standard workday. Alaska, California, Nevada, Puerto Rico and the Virgin Islands have daily overtime laws in place that, in certain circumstances, make it mandatory to give additional compensation to employees who work more than eight hours in a single day. Arizona follows the federal overtime regulations and employees are entitled to time-and-a-half pay if they work more than 40 hours in a single work week.
Which Employers Are Required to Pay Overtime?
Not every employer is required to pay mandatory overtime, however. The federal Fair Labor Standards Act only applies to companies that make more than half a million dollars a year in sales. Exemptions exist at the state level as well, but these vary widely from state to state. If you have any questions about whether your Arizona business is required to pay overtime, speak with an experienced Arizona business law attorney.