Designing a fair and compliant overtime policy is critical for any organization. An effective policy not only protects the company from legal liability but also ensures transparency and fairness for employees. When developing or refining your overtime guidelines, there are several important factors to consider, especially regarding employee classification and compensation for travel time. 1. Apply the Overtime Policy to All Nonexempt Employees One misconception is that overtime policies should apply to any employees who engage in “manual” or “blue collar” work. However, in practice, employees classified as nonexempt under the Fair Labor Standards Act (FLSA) must be covered by the policy. This includes both “blue collar” and office staff who do not meet the criteria for exemption. 2. Understand the Difference Between Exempt and Nonexempt Employees Overtime eligibility depends entirely on whether an employee is classified as exempt or nonexempt. Exempt Employees are not entitled to overtime pay. They are typically salaried and fall under specific exemption categories. Nonexempt Employees must be paid at least the federal minimum wage and receive overtime pay (typically time and a half) for any hours worked beyond 40 in a workweek. It is important to remember that exempt status...
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