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May 12, 2010
Understanding the Difference Between Overtime Premiums and Overtime Pay

If a non-exempt employee works more than 40 hours in a workweek, he or she is entitled to overtime pay based on his regular rate of pay. But there is one situation in which an employer may actually credit part of an employee's pay against any overtime pay that may be due: overtime premiums.

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In a BLR webinar titled "Reducing Overtime Costs: What You Legally Can—and Can't—Do to Keep Workers at Their Straight-Time Rates," Laura P. Worsinger, Esq., explained the difference between overtime premiums and overtime pay.

Overtime Premiums Defined

The CFR defines overtime premiums as follows:

  • Certain premium payments made by employers for work in excess of or outside of specified daily or weekly standard work periods or on certain special days are regarded as overtime premiums.

Here are some key points to keep in mind:

  • The extra compensation provided by the premium rates need not be included in the employee's regular rate of pay for the purpose of computing overtime compensation due.
  • The premium rate must be at least a 50 percent differential.
  • Extra compensation may be credited toward the overtime payments required by the Fair Labor Standards Act (FLSA).

Laura P. Worsinger, Esq. is Of Counsel with the Los Angeles office of Dykema Gossett PLLC. She has broad counseling and litigation experience and specializes in the defense of employers in individual and class actions involving wage and hour violations, misclassification, discrimination, wrongful termination, and other employment-related proceedings. She can be contacted at

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