Overtime Pay & Laws for Public Sector Employees

Instructor: LEROY (Bill) RANDS

Bill has taught college undergraduate and MBA classes in finance, economics & management, 40 years of finance experience and has a MBA degree.

The U.S. Department of Labor and the state labor departments regulate and enforce the laws concerning employee pay and overtime rules. The lesson discusses the labor laws concerning federal, state, county and city employees.

Fair Labor Standards Act

Mary works for the county public library in Oxborn County. She is required to work 46 hours a week, but she is only paid her standard wage of $10 an hour for all 46 hours. She wonders, ''Should I be paid overtime?''

Many employees don't understand the labor laws concerning when they should be paid overtime. Mary looks into it and discovers that The Fair Labor Standards Act (FLSA) is a law governing the employee payment practices of all public and private entities. The law applies to private companies, the federal government, state governments, all agencies of these governments and all political subdivisions like county and city governments.

She learns that the FLSA makes no exemptions from wage and overtime standards for public entities versus private companies, though there are some special considerations.

Compensation Requirements

The FLSA requires that all employees covered by the Act (including employees of public entities) be paid:

  • at least the federal minimum wage for hours worked.
  • one and a half times the hourly wage for all hours worked above 40 hours a week (overtime). In special situations, overtime can be calculated on time above 8 hours a day and 80 hours in a 14-day period.

These requirements apply to all private and public entities, which are audited to ensure compliance with the law. Hotlines are available for employees to report to the Department of Labor (DOL) if they are not being paid fairly.

Mary went online to her state Department of Labor website to report her situation. A DOL inspector showed up two weeks later and cited the county for not following FLSA laws and required them to pay Mary the overtime pay due.

Exempt Vs Non-Exempt

Overtime under the FLSA is due to all employees classified as non-exempt. Exempt employees are generally involved in management, administration, professional and outside sales. Some of the criteria for a person to be declared exempt and therefore not paid overtime are:

  • compensated on a salary basis
  • managing or supervising the business and managing at least two other full-time workers
  • performing office work directly related to the management of the business requiring discretion and decision making
  • those with hire and fire authority

Public Entities Uniqueness

Public entities have employees that are unique, like firefighters and policemen, who might be required to work for extended periods of time because of the circumstances of their work. Obviously a firefighter isn't going to stop work in the middle of putting out a fire to avoid overtime!

The calculation of overtime pay in these circumstances may differ for the general requirements of FLSA.

Fire and police departments may establish a work period ranging from 7 to 28 days in which overtime is paid after a specified number of hours in that work period. Say the Wayside Police Department has a work period of 28 days in which officers are paid overtime after they exceed 160 hours of work. This policy allows for times when an officer might be on duty for extended hours investigating a case. It also provides more flexibility for Wayside to schedule officers to avoid overtime when possible.

Employees who voluntarily work on a part-time basis for the same public agency in a different capacity do not qualify for overtime when all their hours are added together. Same goes for employees who voluntarily substitute for another individual working in the same capacity.

Mass transit employees who spend some time engaged in charter activities do not qualify for overtime either.

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