This sample provision sets forth a company’s policy regarding the rights and eligibility of
employees to earn overtime pay. Using this form can help a company avoid disputes
related to hours worked and pay. This sample policy can be modified to fit the needs of
any employer. This policy should be supplied to all employees within the company,
either as part of an employee handbook or on its own.
Overtime Guidance Policy
A.) Exempt Vs. Non-Exempt Employees
The Fair Labor Standards Act (“FLSA”) stipulates that qualifying employees who work more
than 40 hours in a week are entitled to paid overtime. Such qualifying employees are known as
Non-Exempt. Non-qualifying employees are considered ‘Exempt’ and are not entitled to receive
any paid overtime.
B.) Who is Exempt or Non-Exempt?
The employer will determine if a position is exempt or non-exempt using the three stage test set
out under the FLSA. The three tests are:
1. Salaries level test
2. Salary basis test
3. Job duties test
C.) Employment Contract
The employee’s contract will stipulate whether the role is exempt or non-exempt.
D.) Overtime Pay for Non-Exempt Employees
Non-exempt employees are entitled under the FLSA to time and one-half their “regular rate” of
pay for each hour they work over 40 hours in a one week period.
E.) Training time
Most training time is work time. All training time is work time if it occurs during an employee's
regular shift, or if it is required by the employer.
Training will not be counted as work time only if it:
1. Occurs outside of an employee's normal work schedule,
2. Is truly voluntary (as in with neither direct nor indirect pressure on the employee to
attend, and with no “come back” if the employee chooses not to attend)
3. Not directly related to the employee's current job (i.e., the training is designed to qualify
the employee to get a new job, and not to enhance the skills used by the employee on the
existing job). The employee does no other work during the training.
F.) Travel Time
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“Home to work” and “work to home” travel time is not work time, and this is true even if the
“commute” is longer than normal, to or from a different work site than normal, or the employee
uses a company vehicle for the trips.
G.) Meal periods
Meal periods will not be counted as work time if they are at least 30 minutes long and the
employee is relieved from active duties during the meal period.
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