FLSA Overtime for Shift Schedules: What Managers Need to Get Right

The FLSA measures overtime by the workweek: a fixed, recurring period of 168 hours, seven consecutive 24-hour periods. It can start on any day and hour, and it doesn't have to match the calendar week or the pay period. Once set, you can't change it just to avoid overtime.

Overtime is calculated week by week. You can't average hours across two weeks, so 50 hours in one week and 30 in the next still means ten overtime hours in the first. That's a common mistake with rotating schedules that alternate long and short weeks, and with biweekly patterns like four 10-hour days followed by a shorter week.

Pick the workweek start to fit your shift patterns, ideally at a time when few people are mid-shift, and document it. For 12-hour and overnight shifts that cross the boundary, work out which week each hour falls into. Your payroll system needs the same definition, so verify it matches your policy.

The overtime rate is based on the regular rate, which is more than the base hourly wage. It generally includes nondiscretionary pay such as shift differentials and certain bonuses, divided by total hours worked in the week. Overtime isn't calculated on the base rate alone.

Here's an example. Say an employee earns $20 an hour and works 44 hours in a week, including 10 night hours that carry a $2 an hour differential. In this example, straight-time pay is 44 hours at $20, or $880, plus $20 of differential, for $900 in total. In this example, the regular rate is $900 divided by 44 hours, about $20.45. In this example, straight time already covers all 44 hours, so the extra owed for the 4 overtime hours is half the regular rate times 4, about $40.91. The week's pay in this example comes to about $940.91.

The exact rules for what belongs in the regular rate are detailed, including bonuses, commissions and certain payments that are excluded. Have your payroll provider or attorney confirm your setup, and see whether your scheduling tool computes blended rates. Deputy is one tool that positions itself around automating blended overtime rates, so ask any vendor to show your case.

Time isn't just the scheduled shift. Under the FLSA, employees must generally be paid for all time they're required or allowed to work. Watch these situations:

• Pre- and post-shift tasks. Putting on required gear, booting equipment, receiving handoff briefings and closing out registers can be compensable when they're part of the job.
• Meal breaks. Bona fide meal periods are unpaid only if the employee is completely relieved of duty. Eating at a desk while answering calls doesn't qualify.
• Short breaks. Rest periods of about 20 minutes or less are generally paid.
• Training and meetings. Required sessions usually count.
• On-call time. It depends on how restricted the employee is. Being required to remain on the premises is generally hours worked.
• Travel. Travel during the workday between job sites counts. Ordinary commuting generally doesn't.
• Off-the-clock work. If you know or should know that someone is working, it counts, including answering messages after a shift.

Time clock rounding rules are also regulated and must be neutral over time. Confirm your practice with an attorney.

Employers must pay for overtime that they know about or allow, even if it wasn't approved. You can discipline someone for breaking a no-overtime rule, but you can't refuse to pay for the hours they worked.

To control overtime without violating the law, focus on design and visibility. Schedule to stay under 40 hours by planning shifts with the weekly total in view. A schedule with people at 38 or 39 hours leaves little room for a late handoff.

1. Set alerts at a threshold such as 36 hours so a manager can adjust the rest of the week.
2. Require advance approval for planned overtime, and make approval fast.
3. Manage handoffs. Overtime often comes from shift-change delays, so overlap shifts by a few minutes or fix the process that causes late clock-outs.
4. Review weekly. Look at who's generating overtime, on which shifts and why.
5. Pay it correctly every time, and correct any missed payment promptly.

Time tracking apps such as Buddy Punch can alert managers when employees approach overtime thresholds; check how each product handles rules in your state.

Federal law is a floor. Several states set stricter rules, such as daily overtime after a set number of hours in a day, double time beyond a higher threshold and rules for consecutive days worked. California is the best-known example of daily overtime. Some states and cities also require rest periods, meal breaks, reporting-time pay and advance schedule notice. Where two rules conflict, the one more favorable to the employee generally applies.

There are also special federal provisions. Hospitals and residential care establishments can use an alternative "8 and 80" system under a written agreement, with overtime after 8 hours in a day or 80 in a fourteen-day period. Certain industries and roles have partial or full exemptions, and exemption depends on job duties and pay level, not on job title. Salary thresholds change, so verify the current rule.

Build a simple matrix listing each state where you have employees, with its overtime, break and scheduling rules, and review it yearly. For the scheduling side, see predictive scheduling laws by city and overtime rules: FLSA vs international mandates. The employee shift schedule guide shows how to build coverage that limits overtime.