Ch3. Working Hours and Leave — FLSA Hours, Overtime, and PTO

Standard Hours of Work

Scheduled (Straight-Time) Hours:
1 day: no federal daily limit (California: 8 hrs/day)
1 week: 40 hours (FLSA standard workweek)
(Break time excluded from worked hours)

Overtime:
Employee and employer may not waive overtime by agreement
→ Overtime required for all hours over 40/week
→ Maximum total: no federal cap (but overtime is expensive)

Small employers (fewer than $500k revenue / no interstate commerce):
Overtime law generally applies regardless once FLSA coverage exists
(State laws may apply even to very small employers)

Alternative Work Schedules:
- Compressed workweek (4 × 10): no overtime if total ≤ 40 hrs
- Flexible scheduling: overtime still based on weekly total
- Averaging agreements: NOT permitted under FLSA for most employers
  (Exception: § 7(b) for CBAs in certain industries; § 7(k) for
  public safety employees)

Overtime and Premium Pay

Overtime Premium Pay (employers with covered employees):
Overtime: 1.5× regular rate for hours over 40/week
Night / weekend premium: set by CBA or employer policy
  (no federal mandate outside of certain CBAs)
Holiday premium: no federal mandate; set by employer policy or CBA

Stacking Premium Pay:
Night + overtime: each premium applies separately
  (worker earns both the OT premium and any shift premium)
Holiday overtime (8 hrs or less): 1.5× regular rate
Holiday overtime (over 8 hrs in CA): 2× regular rate

Calculation Example:
Regular rate = $20.00/hour
Overtime 2 hours:
= $20.00 × 2 hours × 1.5 = $60.00 in overtime pay
(or expressed as: base pay $40 + premium $20 = $60)

Rest and Meal Breaks

Break Standards:
Federal (FLSA):
  Short rest breaks (5–20 min): compensable work time
  Bona fide meal periods (30+ min, fully relieved): not compensable

State requirements (examples):
  4 hours worked: 10-minute paid rest break (CA, WA, OR, etc.)
  6-hour shift: 30-minute unpaid meal period (most states)

Compensable Waiting Time:
  On-call (restricted): employee required to remain on premises
  or nearby = compensable work time
  On-call (unrestricted): employee free to use time as desired
  = not compensable (even if carrying a phone)

Classification:
  Employer-controlled waiting = work time
  Employee-free waiting = non-compensable time

Paid Time Off (Vacation / Annual Leave)

PTO Accrual:
1 year employed, 80%+ attendance: typical 10–15 days
Partial year (less than 1 year): accrues monthly
  (e.g., 1.25 days per month worked)

Tenure-Based Increases:
3+ years: 2 additional days per 2 years of additional service
Maximum: typically 20–25 days (varies by employer)

PTO Rollover / Cash-Out:
Federal: no law requires PTO or its payout
State rules (if accrued PTO treated as earned wages):
  CA, CO, IL, NE, ND: "use it or lose it" policies are prohibited
  Most other states: forfeiture permitted with clear written policy

FMLA Leave Coordination:
Employer may require concurrent use of accrued PTO during FMLA
leave (FMLA is unpaid; PTO substitution replaces income)
Unused PTO payout at termination: required in states treating
PTO as earned wages

Key Public and Statutory Holidays

Federal Holidays (11 days — federal employees):
New Year's Day, MLK Jr. Day, Presidents' Day, Memorial Day,
Juneteenth, Independence Day, Labor Day, Columbus Day,
Veterans Day, Thanksgiving Day, Christmas Day

Private-Sector Rules:
- No federal law requires private employers to provide paid holidays
- Holiday pay and premiums are set by employer policy or CBA
- Some states (CA, MA, RI) require Sunday and/or holiday premiums

Paid vs. Unpaid:
Statutory/required holidays: employer policy or CBA controls
Agreed holidays: compensated per employment agreement

Workers' Day (Labor Day):
First Monday of September — a paid holiday by convention
in most large US employers' policies

40 + 12 = 52 ★★★★★ : Standard workweek = 40 hours. FLSA overtime kicks in at hour 41. No federal weekly maximum, but overtime cost creates a practical ceiling. Memory tip: 40 straight + OT at 1.5× the rest

Overtime Premium Rate — 1.5× ★★★★★ : 1.5× the regular rate for all hours over 40/week. Night and holiday premiums (where applicable) stack on top of overtime. Memory tip: OT = 1.5×; night/holiday stacks

PTO — 15 Days at 1 Year ★★★★★ : Federal law requires zero PTO; common US employer practice is ~10–15 days after 1 year. After 3 years, additional days accrue (up to ~25 days). Memory tip: 1 yr = 10–15 days; max ~25 days

Practice Quiz

Q. If an employee works a 4-hour overnight shift (entirely between 10 pm and 2 am) and it is also an overtime shift, what premium pay applies under a CBA providing a night differential?

Overtime premium (1.5× regular rate) for the hours over 40, PLUS the night-shift differential applies to all overnight hours. Both premiums stack — the employee receives the overtime rate AND the shift differential on the same hours.

Q. An employee hired 8 months ago resigns. How many PTO days has she accrued under a plan that provides 15 days per year on a prorated basis?

15 days × (8/12) = 10 days accrued. In states treating PTO as earned wages, she is entitled to a payout of those 10 days on her final paycheck.