There might come a time when your employee needs to render overtime service. As an employee, he is entitled to receive overtime pay based on U.S. Federal laws. You are required to pay his overtime as his employer.
The law says that you need to pay overtime for an employee who renders additional hours beyond his normal 40 hours of work per week. It is computed at the rate of 1.5.
Assuming an employee earns $5 per hour or $200 per week. If he works an additional of 5 hours in a week, he is entitled to an additional pay of $37.50.
You need to properly compute for the overtime payments of your employees. If you do not give them what is due for them, they might lose their trust in the company. They might not perform their jobs properly because they feel they are not paid properly. It might also result in inconvenience on your part as an employer because you owe salaries to your employees that need to be paid.
Improper calculations of overtime pay can also result in under or over remittance of taxes to the government. Taxes are based on the wages of your employees so it is important to compute the overtime pay of your employees properly.
Employees will be happy in a working environment if they know they are paid well and properly. They will become more efficient in their jobs and will help your business raise its reputation as a good employer.