When you take on employees to help grow your small business, you may find that your staff must work more than 40 hours a week.  When this happens, you may be required to pay overtime. According to the Fair Labor Standards Act, those who qualify for overtime must be paid one-and-a-half times their usual rate for the extra hours worked. To help you manage this payroll requirement accordingly, here are a few frequently asked questions that Hawaiian business owners have about overtime.

5 FAQ About Payroll & Overtime Requirements

When is overtime pay required?

Overtime is required when an employee works more than 40 hours total within a workweek. The time-and-a-half rate is applied to all hours worked over 40. For example, if a minimum-wage employee works 43 hours in one week, you’ll need to pay 1.5x the $10.10 hourly rate for three hours.

What if a person works more than eight hours in a day?

Overtime is not required for individuals who work over eight hours in a day, so long as they do not exceed 40 hours total during the workweek. However, in Hawaii, overtime rates are required for those who work more than eight hours a day for a state or county public works construction project.

Can employees be exempt from overtime?

Although the rules are very limited, there are situations in which an employee may be exempt from overtime pay.

To establish an exemption, the employer must prove that the employee is paid a salary no less than $684 per week. They must also show that the employee completes specific duties that fit within FLSA exemption rules. Commonly exempt employees may include those who primarily perform nonmanual administrative work, oversee IT operations, or hold executive duties that involve the management of two or more full-time staff.

Are employees required to get extra pay for working on holidays?

In Hawaii, increased pay for working on a holiday is not required. However, some employers may choose to award these benefits as an extra incentive to employees.  

Can employers offer compensatory time instead of overtime pay?

In limited situations, employers may provide compensatory time—or paid-time-off—instead of overtime pay. To offer compensatory time in place of overtime, the employee must be on a salary and be allowed to take the time off in the same pay period that overtime was worked.

Compensatory time must be earned at 1.5x the rate of overtime hours worked. For example, someone who works four hours overtime must be awarded six hours of comp time.

If you have concerns about the ways your company handles overtime, PayrollHR Hawaii is here to provide clear and consistent payroll solutions. Based in Kilauea, HI, this professional employer organization (PEO) offers comprehensive HR and payroll administration services to small businesses throughout Kauai and Hawaii. Well-versed in complex federal and state laws, this team will make sure your employees are paid correctly and on time. To learn more about these HR outsourcing services, visit this PEO online or call (808) 828-2070.