September 26, 2013

“Winning in Overtime,” and Paying For It, Too

calculate overtime correctly so you pay the correct amount

Dear Mr. Edwards,

I recently read your article “Winning in Overtime” in the August Issue of Dental Economics. I have been working in the Human Resources environment for over 15 years and have not ever heard of using a bonus and/or commission to calculate overtime for an employee. Now with that said, I have not worked for an employer who ever had a full blown commission plan or bonus plan either.

However, in the state of Arizona I am not certain your information is accurate. I also did a bit of research on the DOL website and did not find any information to support your article.

Could you kindly refer me to the proper area to review the information on the DOL website to support your article? If you are speaking of the state of California in your article I would probably agree with the information stated as we all know California always makes everything more complicated than necessary.

I have also worked with many payroll companies and do not ever recall them advising of this information either. I work in the state of Arizona. Please define Commissions and or Bonus plans for calculation purposes.

Thank you very much for your feedback and time.

– Anonymous HR Professional

Good morning, and always glad to hear from a fellow Arizonian.

You ask….

Dear Mr. Edwards, (please call me Paul – Mr. Edwards is my father)

Could you kindly refer me to the proper area to review the information on the DOL website to support your article? If you are speaking of the state of California in your article I would probably agree with the information stated as we all know California always makes everything more complicated than necessary.

For those who haven’t read the original article yet, “Winning in Overtime” can be found here, and discusses the surprisingly complex rules that govern overtime compensation.

As requested, here are two links that provide supporting information on the proper way to calculate overtime pay:

First of all, check out FLSA Fact Sheet #54:

http://www.dol.gov/whd/regs/compliance/whdfs54.htm

It’s important to note that although the above fact sheet was designed to address this common issue in the medical field, the FLSA rule governs all employers in all states, including AZ. Also, “bonuses” are discussed about halfway down and include a sample calculation for a 40 hour work week that includes a non-discretionary, outcome-based bonus.

Second, here’s an SHRM article that discusses the difference between discretionary and non-discretionary bonuses:

http://www.shrm.org/hrdisciplines/compensation/Articles/Pages/Nondiscretionary-Bonuses-Overtime.aspx

“I have also worked with many payroll companies and do not ever recall them advising of this information either.”

We know! This is a common issue and we have saved many of our members’ assets during audits.

As a bit of background information, the article you mentioned was prompted by a CE course attended by one of our attorneys. During the CE, a DOL representative lectured on the problems they most commonly see when it comes to breaking pay rules. For example, some of the first things they look for are whether a bonus or commission system is in place, and whether working interviews are used.

The DOL representative then named “dentistry” as one of the top industries in which they routinely find violations.

Please let me know if you have any other questions or if you have further guidance that would be helpful to us.

Friendly Disclaimer: This information is general in nature and is not intended to provide legal advice or replace individual guidance about a specific issue with an attorney or HR expert. The information on this page is general human resources guidance that is believed to be current as of the date of publication. Note that CEDR is not a law firm, and as the law is always changing, you should consult with a qualified attorney or HR expert who is familiar with all of the facts of your situation before making a decision about any human resources or employment law matter.

Leave a Reply

Please note: CEDR Solutions specializes in providing expert HR support to owners and operators of independently owned medical and dental practices.