How to Approach Overtime Compensation

By   |   April 18th, 2016   |   0 Comments

overtime compensation“We are going to need you to work late/extra time.” “We need to you meet this deadline no matter what.” “We are short staffed; can you come in on your day off?”


Overtime Compensation


In a factory/production setting, it may be pulling an extra shift for a co-worker or it could be you need that extra income by making overtime hours exceeding your normal work week.


The requirements can vary state to state, but typically overtime is calculated for non-exempt employees as time and one-half per hour as we all know. This would be defined as an employee working more than 40 hours in one work week, for the hours worked over 40 – the employer would pay the employee for those hours at a rate of time and one-half.


If an employer is paying overtime and the workload or final product of the employee is not being completed in a timely manner, or to employer’s standards – the issues within the workforce need to be identified. Employee hours worked vs. end product/sales results must be correlated accordingly.


In the past year, overtime for 69.23% of ag-related companies has stayed the same, while only 17% reported an increase of overtime (see more in’s 2015-2016 Agribusiness HR Review).


Giving your employees a clear understanding of what overtime means and how it is used to incentivize additional hours worked. Across many companies, the standard overtime compensation calculation  includes only hours worked, not approved paid absences including:


  • Sick leave
  • Vacation leave
  • Holiday leave
  • Family and Medical Leave Act (FMLA) leave
  • Military leave
  • Jury and witness duty
  • Funeral / bereavement leave
  • Voting time off


For example, John works 46 hours this week and has 8 hours in holiday time. He makes $15.50 per hour. His overtime compensation calculation shows as follows:


  • 54 hours total
  • 40 hours @ $15.50
  • 6 hours @ $23.25 ($15.50 +$7.75)
  • 8 hours @ $15.50
  • Total gross pay: $883.50



As an employer, the overtime compensation ordeal can be a double-edged sword. Completed tasks are necessary for the job to be considered satisfactory and the company to make profits, but if that comes with paying overtime to several employees each pay period, management may need to look at some other options to cut the cost of the overtime compensation. Overtime can be costly to employers, the more gross funds an employee makes, the more the employer has to “match” their FICA deductions. They may look into increasing staff, utilizing another shift of work hours, or reducing their work load/job commitments.


For more information and market research on ag-related companies and their HR standards, visit

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