With vaccinations increasing, restrictions lifting, and summer returning, it’s likely employees will begin to use their vacation time again. If employees are entitled to overtime under the Fair Labor Standards Act (FLSA), how does this paid time off affect employers?

Must an employer must pay overtime if an employee is owed more than 40 hours of pay in one week? In some circumstances, the answer is no.

For example, assume we have an employee who takes eight hours of [paid] vacation time on a Monday. She needs to work extra hours, however, in order to complete her work for the week. As a result, she works 35 hours between Tuesday and Friday. When reviewing the employee’s work week, it appears she is owed pay for 43 hours. Must those additional 3 hours be paid at a rate of time-and-a-half?

No.

Why not? Because there’s an exception to the FLSA overtime rule. The FLSA says that pay owed when an employee doesn’t work but is paid “due to vacation, holiday, illness . . . or other similar cause” doesn’t count to determine overtime eligibility.

So in our example, the employee only actually worked 35 hours (even though she deserves to get paid eight hours of vacation time).  Therefore, she’s owed 43 hours worth of pay – at her straight-time rate.

What if the employee takes a vacation day on Monday and then works 43 hours from Tuesday through Friday? She would be owed pay for 51 hours, and only three of those hours would be paid at time-and-a-half rate.

Not sure if your employees are entitled to overtime or that you’re properly paying them? Call The Coppola Firm with your FLSA-related questions.