Reason number 72 why you need to keep track of employee absences…

Okay, before you go back and look, I haven’t posted 71 other reasons — yet.  But I’m feeling a bit rebellious and decided to go out of order….and 72 sounded like a good number.

So here goes….

72) There are times when you may have to pay an hourly employee for more than 40 hours in a week, and still NOT have to pay any of it as overtime! But this can only work IF you have good employee absence records!

ah, ha!  I’ve caught your interest, haven’t I?  You see savings and you want to know how…okay, read on….

First of all, there are a few conditions for this to work.

1) The employee has to be hourly. That means salaried employees need not apply.

2) You have to have a paid leave policy for said hourly employees. Like paid sick days or PTO (Personal Time Off)

3) The employee has to actually use some of that paid leave in the week in question.

Simple, so far, right?

So here’e the scenario.  You have an hourly employee.  Let’s call her Magenta. And Magenta works in your mad scientist lab.  But one day, Magenta calls in sick.  She caught the flu from her brother RR, and will not be in today.  But no worries, because you offer hourly employees a week of paid sick days.

After a day off, Magenta returns to work. But instead of just working the rest of the week, she stays late, comes in early and ends up putting in a full 40 hour work week so that the big “Sword of Damocles” project stays on track.  Now it’s time to do payroll, and you see that Magenta is owed her regular pay for 40 hours, and another 8 hours of sick leave pay!

That’s 48 hours of pay in one week!  Does that mean she gets overtime for 8 hours of that time?

While there may be exceptions* (there are always exceptions when in comes to labor law rules), in general the answer is no.

The requirement to pay overtime is based on the number of hours worked, not the number of hours paid. So Magenta would get her regular hourly rate for all 48 hours that week.

BUT…if you had no way of documenting leave and the reason for it, Magenta could take her 48 hour paycheck to the Department of Labor, and say “Hey, they didn’t pay me overtime!”  And your company could be hit with FLSA fines and penalties, in addition to having to pay the extra wages.

So the moral of the story is document, document, document!  Keep track of when employees are absent and why, and save yourself time and money down the road.

*One of the exceptions is in states where overtime is computed by the day, rather than just by the week. In that case, those 12 hour days would cost you overtime pay.

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