Time and a Half Wage Rate for Overtime: Industry Standard or Employment Law?

[Boojatta]

Yes, this is an admission of ignorance. Is time and a half simply a conventional benefit, or is it mandated by law?

If it's mandated by law, then it seems that some people might slip through the cracks and not receive the benefits that the law is supposed to provide.

For example, consider the following simple scenario. A person works thirty-five hours per week for one employer (the "majority hours employer") and also works twenty hours per week for a completely different employer (the "minority hours employer"). For example, the person might be paid minimum wage for the majority hours job and need the additional income provided by the minority hours employer. In this simple scenario, we assume that the minority hours employer pays the person one and a quarter times minimum wage. Also, in this scenario, the person has no opportunity to increase the number of hours at either job. For example, the employer who pays minimum wage will not accept an offer to work fifty-five hours per week of work. For example, the employer who pays one and a quarter times minimum wage will not accept an offer to work forty hours per per week.

One possible solution (presuming that I'm not imagining a non-existent problem): an income tax credit that would increase net income after taxes to what the net income would be if any hours beyond the dividing line between regular hours and overtime hours were paid at the rate of at least 1.5 times minimum wage.

Alternatively, make a bigger change to the tax system. Reduce to zero the income tax payable for minimum wage work. After all, income tax isn't the only tax. Tax the part of an hourly wage that is above minimum wage. This policy would provide people who complain about the existence of a progressive income tax system with the option of completely avoiding income tax by finding jobs that pay minimum wage.

Edited to fix a small error in formulation of the ideas, and edited again to fix an error introduced by the first edit. The ideas remain unchanged, so no reply has the table cloth pulled out from under it.

[Cheney Killed Bambi]

1. It's the law

The Fair Labor Standards Act.

http://www.dol.gov/dol/topic/wages/overtimepay.htm

[Boojatta]

3. Thank you.

Is the following also the law?

An overtime income tax credit increases the net income of a taxpayer who doesn't work overtime for any single employer, but who would be working overtime if all of the worker's weekly hours of work that earn taxable income were done for a single employer.

Calculate what the taxpayer's net income would be if the gross employment income were unchanged, and the total weekly hours of work were unchanged, and all hours of work were paid at the same hourly rate. Obviously there would be no change. However, that tells us the average hourly rate. The overtime rate is 1.5 times that rate.

Now, calculate what the taxpayer's net income would be if the overtime hours part of the amalgamated hours were paid at the overtime rate. The taxpayer is entitled to claim an overtime tax credit that ensures that the taxpayer's net income is exactly what it would be if the overtime hours part of the amalgamated hours were paid at the overtime rate.

[mntleo2]

6. They get around this in one way ...

...If you are "salaried" meaning you get a lump amount, say, $2000 a month, then they can work you to death all they want and not be obliged to pay you one red cent more if you work more than 40 hours a week.

This is how some cheap slave laborers get more work for less.

Just thought I might add to this conversation ...

Cat In Seattle

[liberalmuse]

2. I thought the Bush cabal overturned that.

Oh hell, what do I know? He did so many heinous things while in office I found it almost impossible to keep up. Did he really fail in overturning this?

[ThatPoetGuy]

4. They overturned parts of it.

If I remember correctly, factory supervisors no longer receive time-and-a-half, under the law, but most other industries and positions do. Still a rotten change in the law.

[ConcernedCanuk]

5. Slightly off-topic, but a true story from my past.

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I worked legally for an employer for $7.50 an hour.

We had a verbal agreement that any overtime worked(and it ended up being considerable) would be paid CASH(under the table) at a rate of $5 an hour.

Not long after I left his employ for another, my new boss was talking to my old boss and asked him

"Is it true that you paid Dave(that's me)$7.50 an hour for the first 40 hours a week, and then $5 an hour after that?"

"SURE" he responded - "Think about it - he's tired, he's worn out - he's not worth as much!"

This was over 15 years ago - but I still find it amusing - there's a different sort of logic going on there.

I still chuckle when I remember that conversation . .

[Boojatta]

7. Kick

[Philippine expat]

8. Its the law

however the 40 hours must be for the same employer