Compliance with state and federal labor laws is a requirement for employers, irrespective of their industry and size. North Carolina overtime law is one such regulation that outlines the requirements and exceptions regarding overtime pay, employee classification, work hours, and more.
You must be aware of North Carolina overtime law requirements as part of your compliance policies. This guide provides:
- A comprehensive overview of these laws
- Clarifying eligible hours worked
- Overtime eligibility and calculation methods
- Specific rules and exceptions
- The processes for filing wage complaints
Table of Contents
Maximum/Minimum Hours Worked
In North Carolina, state-specific restrictions now limit how many hours employees older than 18 can work per day or week. As long as the employer is compensating accordingly, they can have significant flexibility in their scheduling.
Lack of State or Federal Limitations on Hours Worked Per Day or Week
Neither the state of North Carolina nor federal law sets a maximum number of hours worked per day or week for adult employees. The only requirement is fair compensation to eligible employees. It is the same for large corporations and smaller businesses. Such lack of a limitation allows firms to operate with considerable freedom in managing work schedules.
Employer Discretion in Adjusting Employee Schedules
North Carolina labor laws allow employers to alter employee work schedules as needed legally. They have sole discretion to make changes, including mandating overtime work. However, the requirement for fair compensation remains, and employers must follow all the legal requirements for overtime pay.
Employers are not required to pay hourly and non-exempt employees for minimum numbers of hours. They should pay only for the hours worked.
Overtime Pay and Hours Worked
There is no state overtime law in North Carolina, and the state follows the Fair Labor Standards Act (FLSA) guidelines on overtime pay.
Requirement of Overtime Pay for Non-Exempt Employees
According to the FLSA, all non-exempt employees in North Carolina are eligible for overtime pay for hours worked over 40 in a workweek. The overtime rate is one and a half times the employee’s regular pay rate.
Discretion of Employers in Mandating Overtime Work
Employers in North Carolina can require employees to work overtime as per their requirements. Employees cannot refuse to work overtime shifts. Also, employers have the discretion to change schedules at any time. However, they must compensate the employees at the overtime rate for any hours worked beyond the standard 40-hour workweek.
Consequences of Refusal to Work Overtime
Mandatory overtime is legal in North Carolina. If an employee refuses to work overtime, they can face consequences that can include disciplinary action or even termination. The law allows employers to set work hour requirements as part of the job’s expectations.
Employee Classification and Pay
In North Carolina, employee classification largely determines minimum wage and overtime pay eligibility. That is why accurate employee classification is mandatory, and any mistake can result in fines and legal action.
Requirement for Non-Exempt Employees to Receive Minimum Wage and Overtime Pay
Generally, all hourly employees are non-exempt under the North California overtime law. Employees must have worked over 40 hours within a work week to be eligible for overtime. Employers are required to pay all employees at least the minimum wage rate of $7.25 per hour.
Additionally, the overtime pay rate in North Carolina is 1.5 times the regular pay rate. This minimum wage rate can be lower for tipped employees, provided they consistently get at least $30 commission per week.
Exemptions for Salary Payment
Specific categories of salaried employees are exempt from overtime payment. In North Carolina, the following categories of salaried employees are exempt:
- Executives
- Administrators
- Season workers
- Skilled professionals
- Computer employees who earn $684 per week
- Outside sales employees
- Minors
There can be other categories, too, and employers must refer to FLSA guidelines to decide who can be exempt from overtime requirements, depending on their duties and salary levels.
Criteria for Exemption from Minimum Wage and Overtime Pay Requirements
Tipped employees and minors are exempted from the minimum wage requirement. As per the FLSA guidelines, as of 2024, tipped employees can be paid a lower than minimum wage rate if their commissions make up for the difference.
North Carolina overtime law also allows minors (under 18) to be paid lower than minimum wage. However, in both cases, employers must consider the regular pay rate, not the adjusted wage rate, while calculating the overtime pay.
Breaks and Rest Periods
Lack of Mandatory Rest Breaks or Meal Breaks for Most Employees
North Carolina labor laws do not require employers to provide most employees rest or meal breaks. This policy applies to the adult workforce, allowing employers to determine their break policies.
Most employers provide appropriate break time for employees for a more productive workforce and a healthy work environment.
Exceptions for Youths Under 16 Years Old
For employees under the age of 16, North Carolina requires employees to provide a break of 30 minutes after any period of five consecutive hours of work.
Employer Obligations Regarding Break Provisions
While not mandatory, employers must follow the federal guidelines if they provide breaks. All short breaks (less than 20 minutes) are generally considered compensable work time, while breaks 30 minutes or longer are unpaid.
Minimum Scheduled Hours
Obligation of employers to pay employees for actual hours worked
In North Carolina, employees have no obligation towards employees to pay for minimum scheduled hours unless they are salaried employees. All hourly employees should be paid for the actual hours worked without obligation for minimum scheduled hours.
Furthermore, no state or federal law restricts the maximum number of hours an adult employee can work.
Exceptions regarding promised minimum wage payments or benefits
The exception is if the employee makes a wage payment agreement with an employee for a certain minimum number of hours. However, giving or not giving the promised wage benefits is entirely up to the employer. There are no state or federal guidelines, and the policies are at the employer’s discretion. Wage benefits can include vacation time, paid sick days, and holiday pay. And if the employer promises such wage benefits, then as per the N.C.G.S. 95-25.13(2), the employer must: “Make available to its employees, in writing or through a posted notice maintained in a place accessible to its employees, employment practices and policies about promised wages.
Overtime Eligibility
Generally, non-exempt employees in North Carolina are entitled to overtime pay for hours over 40 in a workweek. It includes most hourly and salaried workers who do not fall into exempt categories (check Exemptions for Salary Payment above).
Exemptions for Certain Types of Employees
Professional employees, managers, and specific administrative staff may be exempt from overtime pay if they meet specific criteria under the FLSA. This includes:
- All bona fide professionals who earn not less than $684 per week
- All highly compensated employees making more than $107,432 a year
- Computer employees earning at least $27.63 per hour
North Carolina’s overtime laws are guided by the FLSA, with additional state-specific regulations where applicable.
Overtime Calculation Methods
In North Carolina, employers must choose the overtime calculation method based on the type of employee.
Calculation of overtime pay for hourly employees
Most hourly employees are paid 1.5 times their regular wage rate for overtime hours.
Say an employee earns $20/hour. Overtime rate = 1.5 x regular rate. If they work 45 hours a week, the overtime pay for 5 hours is calculated as 5 hours x ($20 x 1.5) = $150.
Considerations for Hourly Employees with Bonuses/Commissions
The overtime rate of such employees is calculated considering their commissions based on this formula:
{((Total hours x Hourly Rate) + Commission) / Total hours} / 2
Assume the same employee as above earns a $100 commission that week. The regular rate becomes ($900 regular pay + $100 commission) / 45 hours = $22.22/hour. The overtime rate is 1.5 x ($22.22/2) = $16.66/hour. Thus, overtime pay = 5 hours x $16.66 = $83.3.
Calculation of overtime pay for salaried employees
If a salaried employee is non-exempt, they are paid overtime at an FLSA rate of 1.5 times the regular wage rate.
For instance, if a salaried employee earns $800/week for a 40-hour workweek, their hourly rate is $800 / 40 = $20/hour. For overtime hours, pay 1.5 x $20. If they work 45 hours, the overtime pay for 5 hours is 5 hours x ($20 x 1.5) = $150.
Specific Rules and Exceptions
Eligibility for Overtime Pay for Most Employees
Most employees in North Carolina are eligible for overtime pay, except those who fall into exempt categories as defined by the FLSA.
Exceptions for Exempt Categories and Seasonal Employees
Under the North Carolina and federal overtime laws, certain employees, such as executives, professionals, and seasonal workers, may be exempt from overtime pay requirements. However, seasonal employees working for establishments that operate more than seven months a year are eligible for overtime. Exempt category employees earning less than $685 weekly can also be eligible for overtime.
Government Employees’ Entitlement to Compensatory Time Off
Government employers have the option to offer compensatory time off to employees as an alternative to overtime compensation. However, only public sector employers are eligible for compensatory time off, not private employers.
Statute of Limitations for Collecting Unpaid Overtime
Under the FLSA, employees can claim unpaid overtime within two years from the violation date. However, if the employer is a wilful violator, this limitation can be extended for three years.
Filing Wage Complaints
Process for Employees to File Complaints with Relevant Authorities
In North Carolina, employees can file a complaint under both the federal and state overtime laws at the same time. Employees can file complaints with the State Department of Labor or the U.S. Department of Labor if they believe their overtime rights have been violated.
Options for Filing Complaints
Complaints can be filed with the North Carolina Department of Labor or the United States Department of Labor, depending on the nature of the violation.
Overtime for Salaried Employees
Employers in North Carolina should not consider all salaried employees exempt; there are conditions under which salaried employees are eligible for overtime.
Conditions under which salaried employees may receive overtime pay
A salaried employee who is not in one of the categories, administrators, managers, skilled employees, or supervisors employed solely to supervise other employees – and makes less than $455 is eligible for overtime.
How can Truein help with Overtime Pay management?
Truein offers a robust solution for managing overtime pay, particularly beneficial for organizations dealing with complex timekeeping and payroll challenges. As a time and attendance management solution, it simplifies the tracking and calculating of overtime hours, ensuring accuracy and compliance with relevant labor laws.
Truein can automate the process of overtime calculation and compliance. It further reduces manual errors and administrative burdens by integrating into payroll systems. This makes payroll processing more efficient and helps maintain accurate records for audits and compliance. Learn more about Truein’s capabilities here.
Conclusion
North Carolina overtime laws help employers navigate employment practices effectively and ensure compliance. This guide enables you to adhere to various overtime regulations, ensuring employers can maintain lawful operations and foster positive workplace environments. Employers can count on Truein for overtime management features to streamline overtime pay management processes, facilitating compliance with state and federal laws.
