Can Employees Agree to Waive Overtime?

Here are some little-known facts about overtime. Actually, it’s not so much that they are little known as oft ignored.

Agreements to Waive Overtime Barred

Employees may neither waive their right to be compensated for overtime hours worked nor agree to a lower overtime rate than that required by the Fair Labor Standards Act (FLSA). Therefore, even if employees have made such an agreement, they retain their right to recover overtime pay required by the FLSA.

Holiday/Sick Pay Not Included

Only hours actually worked count in the overtime calculation. Therefore, holidays not worked, vacation days, sick days, etc., are not counted. The fact that an employee receives holiday pay, vacation pay, or sick pay is of no consequence for overtime purposes. The test is hours worked rather than hours paid.

Averaging Hours Prohibited

Each workweek must be considered separately in determining overtime hours, regardless of the length of the pay period. Therefore, time over 40 hours worked in one week may not be offset against time under 40 hours worked in another week (except for certain arrangements permitted for hospital and nursing home employees, firefighters, and law enforcement personnel).

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Multiple Jobs Mean Careful Calculations

If an employee is working two separate jobs at different rates for the same employer, overtime is owed if the employee works a combined total of more than 40 hours in a workweek.

The overtime should be calculated based on a regular rate of pay that is the weighted average of the rates for each job. For example, if an employee works 30 hours at $10 per hour and 20 hours at $8 per hour, the weighted average is $9.20 (30 hours x $10 per hours + 20 hours x $8 per hour ÷ 50 hours). The overtime pay is $46 (1/2 of $9.20 per hour x 10 hours).

Alternatively, the employer and employee may agree in advance that overtime will be paid based on the rate for the type of work that was performed during the overtime hours.

Belo Contracts for Irregular Hours

For employees who normally work irregular hours and are often on their own, such as field service personnel, a special form of contract arrangement for calculating overtime, known as a Belo contract, is permitted. Such contracts must do the following:

• Specify a realistic minimum hourly rate.
• Include overtime at 11/2 times that rate for all hours over 40.
• Guarantee a weekly rate regardless of the hours worked, even if less than 40.
• Cover no more than 60 hours.
• Contain a specific agreement between the employer and employee (preferably in writing).

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