When calculating overtime pay, companies must be careful to calculate it based on a 40 hour workweek, no matter what amount of time the pay period covers. Below are examples:
- Biweekly Pay Period
Simply pay overtime for any hours worked over 40 in each of the two weeks. The mistake some companies make is basing overtime on the entire two-week period, with overtime paid for any hours worked over 80.
- Semi-Monthly Pay Period
The twice-per month structure takes a bit more tracking to ensure correct payment of nonexempt employees. Since the pay period is normally based on calendar dates, the employer must look at where the work week falls during those dates. A work week will usually be split up among two pay periods, so the employer may be paying overtime that began accruing in the previous pay period.
To review your company's overtime calculation strategy, please contact Nextep's HR or Payroll Departments.