In Alabama, as in every state, overtime laws are essential for regulating the compensation of employees working beyond regular hours. Employers must be aware of these laws for legal compliance, managing labor costs, and maintaining employee relations.
The Alabama overtime laws and regulations are set within state and federal guidelines. As an employer, you must be aware of these laws and implement them within your H.R. policies. To help employers comply, we created this comprehensive guide overviewing Alabama overtime laws.
Table of Contents
Understanding Alabama Overtime Laws
Definition of overtime according to Alabama law
In Alabama, as of 2024, any hours worked over 40 in a single workweek are considered overtime as per law. It is in tandem with federal law and consistently implements the Fair Labor Standards Act (FSLA) definition. Alabama has no state law definition for overtime; however, unlike most states, Alabama doesn’t require daily overtime pay for hours worked over a standard eight-hour workday. This means that if the total work hours do not exceed the 40-hour weekly threshold, even if workers work over 8 hours a day, they do not need to be paid overtime.
Which employees are entitled to overtime pay?
The majority of hourly employees in Alabama are entitled to overtime pay. It includes all hourly, tipped, and certain salaried employees. The state follows the FSLA laws on the overtime eligibility criteria, ensuring that full-time and part-time workers receive compensation for overtime hours irrespective of industry type.
However, under Alabama law, certain employees, such as independent contractors and volunteers, are generally not eligible for overtime pay.
Exemptions: Categories of employees exempt from overtime
As of 2024, Alabama overtime laws recognize all exemptions described within the FSLA framework. Under these regulations, specific categories of employees are exempted from overtime pay requirements. It typically applies to salaried employees who meet specific criteria related to their job duties, responsibilities, and salary levels.
Here are the employees commonly exempted from overtime in Alabama, including executive, administrative, professional, outside sales, and certain computer-related occupations.
- Any employee who is highly compensated, earning over $107,432 per year
- Employees responsible for managing at least one other employee, such as administrators and executives
- Employees working in creative professions and sales
- Salaried computer employees earning at least $684 per week
- Outside sales employees
All other salaried employees working in positions requiring specialized skills and knowledge
For employers, it is essential to be aware of these exemptions and accurately categorize employees to avoid potential legal issues.
Calculation of overtime pay rates
The overtime pay rates in Alabama are the same as the federal rates, which are 1.5 times the regular wage rate. For every hour worked over 40 per week, employees should be paid one and a half times the regular pay rate. For instance, if an employee’s regular hourly rate is $15, their overtime rate would be $22.50 (1.5 x $15) per hour.
This is a simple calculation for salaried employees. However, overtime calculation for commission employees in Alabama is different. The overtime rate for commission-receiving employees is calculated as follows:
(Total hours x hourly rate + commission) / total hours worked in the workweek
Then, they are paid half of this regular rate for each overtime hour.
Let’s understand this with an example.
An employee works for 50 hours a week at minimum wage, that’s $7.25 per hour and receives $50 as commission for the week. Their overtime rate will be calculated as follows:
50 x 7.25 + 50 / 50 = 8.25
But they will be paid half of this rate for overtime, which is 8.25/2 = $4.12 per hour.
So their total pay will be : 40 x $7.25 + 10 x $4.12 = $ 331.30
Employers must ensure that overtime calculations are based on the actual hours worked and that the pay rate accurately reflects the employee’s regular earnings.
Key Provisions of Alabama Overtime Laws
Overtime pay rate: Calculation and requirements
Overtime pay rates in Alabama are, by federal law, one and a half times the regular pay rate with exemptions. Salaried and tipped employees receive overtime at this rate; however, employers can use the “tip credit” system for tipped employees. It allows employers to pay tipped employees lower than the minimum wage rate.
However, employers cannot include the tipped credit in the overtime pay calculation, and the final compensation should not be lower than the minimum wage rate, including tips.
For commission-based employees, the overtime rate is as mentioned above, which considers their commission earnings, too.
All eligible employees are entitled to receive one and a half times their regular hourly rate for overtime hours, whether full-time or part-time.
Hours worked: What constitutes “work” for overtime purposes?
As per the FLSA section 29 C.F.R. Part 785, all time an employee is required to be on the employer’s premises, on duty, or at a prescribed workplace is counted as working time. However, additional conditions such as travel time, on-call time, and training time can also be included in the overtime depending on the scenario and need to be discussed with the legal team.
However, employers should include break periods of less than 30 minutes at work. Additionally, any time spent in preparation before the actual start of the main work activity is also considered work.
Record-keeping requirements for employers
As per the Alabama overtime laws in 2024, all employers in the state must keep accurate records of their employees. This includes their total hours worked each day and workweek, the regular hourly pay rate, total daily or weekly straight-time earnings, total overtime earnings for the workweek, deductions from or additions to wages, and total wages paid each pay period.
As per the law, it is essential to maintain accurate records for employees for three years to comply with legal standards. It also serves employers as crucial documentation for disputes or inspections.
Enforcement and penalties for violations
Per the 2022 Code of Alabama Title 25 – Industrial Relations and Labor Chapter 8, violating labor laws can lead to significant penalties. These penalties include back payment of wages owed, liquidated damages, fines, and, in severe cases, legal sanctions.
- The penalty can include a fine of $300, which can go up to a civil penalty of $5000 for certain violations.
- An employer who violates Act 2009-565 may be deemed guilty of a Class B or Class C misdemeanor.
All employers must adhere to the Alabama overtime laws to avoid costly legal repercussions and to maintain a fair and compliant workplace environment.
Common Misconceptions about Alabama Overtime Laws
It is common for employers to be confused about various aspects of Alabama overtime laws. Let’s look at some of the common myths regarding these laws.
Myth: All salaried employees are exempt from overtime pay
Being paid a salary does not automatically exempt an employee from overtime. It entirely depends on an employee’s job duties and salary level and strictly follows the Fair Labor Standards Act (FLSA) guidelines.
Myth: If an employee agrees to it, you don’t have to pay overtime
All eligible employees must be paid overtime, regardless of any agreement. Employers must comply with the overtime regulations irrespective of any informal or formal agreements with employees to waive overtime pay.
Myth: Employees working overtime without permission qualify for overtime pay
In Alabama, employees must have permission from their employers to work overtime shifts. Employees in all roles should have permission to be eligible to receive pay for overtime hours.
Frequently Asked Questions
Can I offer comp time instead of overtime pay?
All private sector employers in Alabama must pay overtime rather than offer compensatory time off. The payment must be made in the next regular payroll period following the period in which the overtime was earned.
Do meal and break periods count as work time for overtime calculations?
It depends on the duration of the break. Short breaks, usually lasting about 5 to 20 minutes, are generally considered compensable work hours. Any break of 30 minutes or longer is not considered work time.
How can Truein help with Overtime Pay management?
Truein can be a significant aid in managing overtime pay in several ways. As an attendance tracking system, it also features additional robust features that can help employers ensure compliance and fair compensation.
Truein offers face recognition, G.P.S. geofencing based on precise work time, and attendance tracking for employees’ working hours. The system can automatically calculate overtime pay based on the recorded hours, reducing errors, and ensuring that employees are paid correctly according to state and federal laws. With over 70 customizable policy templates, employers can set Truein according to their business needs and local laws. It also features real-time reporting on employee hours, including overtime, enabling employers to monitor and manage labor costs more effectively.
Know more about Truein’s features here.
Conclusion
Alabama overtime laws remain crucial to ensure employers comply with federal and state labor laws. For proper calculation of overtime pay, employers must know the difference between exempt and nonexempt employees and the importance of adhering to precise record-keeping standards.
Truein can help employers across industries comply with overtime laws. Its accurate attendance monitoring and record keeping help build a trustworthy and respectful workplace, fostering employee satisfaction and preventing costly legal disputes.
