Also be very careful with part time employees who could trigger eligibility for benefits or trip your headcount into the Affordable Care Act mandatory health care rules. Allowing an employee to work more than 30 hours in a week could unintentionally activate these benefits. And you might not realize the error for some time which would compound penalties.
There are tricky areas of compensation law that should be discussed with an employment attorney. For example, are non-exempt employees who take work home eligible to be paid for that time? The answer is yes. Could that same work qualify for overtime- yes. What about the employee who routinely comes in early, putting in more than their scheduled time? The answer is- check with counsel but probably yes. What about flex time employees who stay a little late to complete a project – that time must be compensated, possibly with overtime.
Finally, you cannot presume that other states have the same rules on overtime. For example, California requires overtime any day the employee works more than 8 hours in a day, but they have specific exemptions to the rules.
If you are using this type of compensation practice or considering it, I strongly recommend you speak with an attorney who practices employment law. The penalties and embarrassment to your business is not worth the savings in overtime pay.
Jeff Matthews, CPA, CGMA is a partner with B2B CFO® and a member of The Sunrise Alliance. The Sunrise Alliance is a network of experienced professionals who provide support to small and medium-sized businesses, with the development and implementation of their strategic business objectives. You can explore The Sunrise Alliance at www.TheSunriseAlliance.com and visit Jeff’s website at www.JeffMatthewsCFO.com