By Jason R. Mau

Question: Can you clarify whether we must pay employees overtime if their 40 straight-time hours include paid time off (PTO) and then they work above that 40 hours?

Answer: Starting with the basic overtime law under the Fair Labor Standards Act (FLSA), all nonexempt employees shall be paid overtime (time and one-half their regular rate) for all “hours worked” over 40 hours in a workweek. This means that, unless there’s an employment agreement stating otherwise (with some exceptions in certain industries), all time when they are required to be on duty and are “suffered or permitted to work” counts towards the 40-hour workweek for calculating overtime purposes. PTO (such holiday pay, vacation, or personal days) is not “hours worked” for purposes of overtime pay because they aren’t on duty or permitted to work.

Often, an employee will take eight hours of PTO for a personal day, work nine hours a day over the next 4 days (36 hours), and then question why he didn’t receive four hours of overtime pay for the week. While his paycheck will reflect that he was compensated for the equivalent of 44 hours for that week, eight of those hours weren’t “hours worked” under the FLSA. Only 36 hours were “hours worked” that week, so no overtime compensation was required to be paid for any hours that happen to put the employee above the basic 40-hour threshold for the workweek.

Alternately, if the employee took the same eight hours of PTO and then was permitted to work 11 hours a day over the next four days (44 hours), he would be eligible for overtime compensation for the four hours actually worked during the workweek over the 40-hour threshold.

Under the first example, the employee would receive eight hours PTO pay and 36 hours at the regular rate. Under the second example, he would receive eight hours PTO pay, 40 hours at the regular rate, and four hours at the overtime rate of time and one-half. Of course, you have the discretion to voluntarily pay all hours over 40 hours in a workweek at a higher rate, regardless of whether some of those hours were taken as PTO.

Jason R. Mau is an attorney in the Boise office of Parsons Behle & Latimer. Mau is a member of the firm’s Litigation, Employment, and Real Estate practice groups and concentrates his primary practice in the areas of employment, commercial, real estate, and construction litigation, with experience in cases before the District Court of the United States and State of Idaho. He can be reached at 208-562-4898 or jmau@parsonsbehle.com.