What You Didn’t Know About Overtime: Laws, Loopholes And Little-Known Facts

What You Didn't Know About Overtime Laws, Loopholes And Little-Known Facts

Avoid misconceptions and oversight when it comes to overtime laws and other hourly-wage framework.

Like many American hourly workers, your time is, quite literally, your money. Every minute spent on the job can translate towards a mortgage, a car payment or a much-needed vacation. You work hard for your money, so make sure your time is well-accounted for. Avoid misconceptions and oversight when it comes to overtime laws and other hourly-wage framework.

Proper Use of Comp Time

When it comes to labor laws and overtime, compensatory (comp) time is often misused. In the private sector, employees may not substitute comp time for overtime. As general rule of labor law, overtime can only be paid as comp time by government employers. If your private employer attempts to swap comp time for overtime, stand your ground – don’t let your company illegally take advantage of you.


For those employees whose work is highly dependent upon or facilitated by the use of computers and computer software programs, overtime labor laws hold a different weight. Engineers, drafters, machinists and other professionals who are skilled in computer-aided design software (including CAD/CAM) are often mistakenly left out of overtime compensation. The misconception lies in the fact that these occupations do not involve computer systems analysis. However, they are indeed not exempt computer professionals and should be paid overtime.

Independent Contractors

Most true independent contractors are not entitled to overtime pay. However, many companies incorrectly classify workers as such, unfairly cheating them out of extra pay for overtime hours. Since many different factors determine the definition of an independent contractor, it is important to keep track of your specific situation. How permanent is your business relationship? How integral are your services? Do you have opportunities for profit and loss? How much control does the company have over how, when and where work is done? The answers to these questions might very well determine that you indeed deserve overtime pay.

Chinese Overtime

When hours vary from week to week, and the employee is paid a fixed salary rate, the employer may use an overtime calculation method known as “Fixed Salary for Fluctuating Workweeks” (informally known as “Chinese Overtime”). This method is highly popular, yet many requirements must be met.

The fixed rate is divided by the amount of hours worked that week, including overtime and standard time, yet half time is added to overtime hours to raise it to time and a half. With almost no exceptions, the salary may not be reduced for short workweeks. The salary must be large enough to ensure that the regular rate will never drop below minimum wage, and during weeks with many hours worked, the fixed salary remains the same, lowering both the hourly wage and the overtime wage.

The Total Cost

When it comes to labor laws, overtime is a very complicated matter. Some occupations thrive on it, while others are (somewhat unfairly) exempt. The requirements are many and complications are everywhere – knowing where you stand is key to receiving just compensation. Read up on labor laws, know your overtime regulations – even if you discover your eligibility late, you can often still cash in on all the underpaid time you had missed.

Mike is a daily contributor to several business blogs and blogging websites.