An employee must be paid for each hour or part of an hour worked. Paid time at work includes time when an employee is required (scheduled) to work; permitted to work; or required to remain at the disposal of the employer. All three of these considerations go into calculating when the overtime threshold has been crossed.
Employees who are paid in some manner other than an hourly rate are still entitled to overtime. Whether the employee is paid by the day, the week, the month, or any other method (ie. flat rate, incentive-based, piece rate, salary and commission), an hourly rate must be determined.
"Permitted to Work"
An employer has permitted an employee to work if the employer:
- knows or ought reasonably know that the employee is working; and
- does not cause the employee to stop working.
For example, employees scheduled hours of work are from 8:00 a.m. to 5:00 p.m. each day with a one hour unpaid lunch break (eight hours). The employer knows that some of them come to work at 7:30 a.m. and start working, but does not say anything about it and allows this practice to continue. In this situation, the employer has "permitted these employees to work." The employees must be paid for the extra time.
"At the Disposal of the Employer"
"At the disposal of the employer" means any time that the employee is under the direction and control of the employer and available for work, even if the employee does not actually have to work. For example, if employees are required to report for work 15 minutes before the scheduled shift starts, or if they must remain after work to complete paperwork and prepare for the next business day, the employees are at the disposal of the employer and entitled to be paid for the extra time.
Overtime must be paid at the rate of at least 1.5 times the employee's hourly wage rate. For example, the overtime rate for an employee earning $12 per hour is $18 ($12 x 1.5). Employees earn overtime by the day and week.