Question: How do I calculate overtime when an employee takes PTO and gets paid for more than 40 hours in the workweek?

Answered by the HR Experts

You’re only required to pay overtime when a nonexempt employee works more than 40 hours in a workweek. Paid time the employee didn’t work—such as vacation, paid holidays, or sick leave—doesn’t count towards hours worked for overtime purposes.

A couple of examples:

• If an employee takes 8 hours of sick leave on Monday, then works four 10-hour shifts on Tuesday through Friday, they would be paid for 48 hours total: 8 sick leave hours at straight time and 40 worked hours at straight time. Because the employee only worked 40 hours, no overtime is owed.
  If an employee is paid 8 hours for a non-working holiday on Monday, then works five 10-hour shifts on Tuesday through Saturday, they would be paid for 58 hours total: 8 holiday hours at straight time, 40 worked hours at straight time, and 10 overtime hours for the hours worked over 40 in the workweek.

Overtime rules can vary by location, so check your state or local laws for additional requirements.

This content is provided by the HR Pros with Mineral HR.

Nicholle Peterson, Benefits Plan Manager comments, 

  “Overtime is owed only for hours actually worked over 40 in a workweek—paid time off, such as vacation, sick leave, or holidays, does not count toward this threshold. So, if an employee receives PTO and works less than 40 hours, no overtime is due, even if the total paid hours exceed 40.”

To learn more about our online tool, Mineral HR, contact Nicholle at (320) 214-2921.

This Q&A does not constitute legal advice and does not address state or local law.