Answer: Kara, JD, SPHR, one of our HR Pros says…
Overtime pay depends on the number of hours actually worked by the employee during the workweek. Under the Fair Labor Standards Act, overtime only needs to be paid when hours worked exceed 40 in a workweek. You should, therefore, do your overtime calculations without considering paid time off hours. Paid time off can always be paid at straight time.
Here’s an example:
Non-exempt employee John calls in sick on Monday and asks to use 8 hours of paid time off. He then works 8 hours per day Tuesday through Saturday. In this situation, he is not owed any overtime because he performed work for only 40 hours that week. He should be paid all 48 hours at straight time.
However, if John calls in sick Monday and asks to use 8 hours of paid time off, then works 9 hours per day Tuesday through Saturday, he would be owed 5 hours of overtime because he performed work for 45 hours that week. He’d be paid 48 hours at straight time and 5 hours at a time and a half.
Keep in mind that a handful of states have daily overtime rules that may come into play. Those rules follow the same principles, though. You only need to look for overtime when an employee’s actual hours worked exceed the legal threshold.