The Importance of Understanding Employee Overtime Rules

Are you able to separate the myth from law when it comes to employee overtime rules?

There are many myths and misunderstandings when it comes to dental practice employees. Part-time vs. full-time; hourly vs. salaried; and exempt vs. non-exempt. It may seem confusing, but if you apply some basic guidelines it can be less confusing than people think. And it can help you avoid getting pinched into paying overtime you hadn’t expected.

Imagine that a member of your dental practice staff is a salaried employee — they receive a set salary for the 40 hours they work each week.

Now imagine there’s a one-day, off-site practice management workshop you want them to attend, and the workshop is scheduled for four hours on a Saturday morning. The question is, must you now pay that employee four hours of overtime for attending the workshop?

If you answered “No,” you really need to read this article. Even if you answered “Yes,” there’s a lot to be aware of when it comes to dental practice staff and overtime rules.

“Under the Fair Labor Standards Act, you have Federal rules that govern overtime for all 50 states,” explains William Barrett, chief executive officer of Mandelbaum Salsburg, PC a Roseland, NJ-based law firm. “So there is a threshold by which you have to live. But then individual states can impose various rules or regulations as well.”

Dental Employees Overtime - Rule of Thumb

Barrett says there’s a good baseline operating assumption that he subscribes to with all dental practices. Generally in a dental practice, very few employees are exempt from overtime. Meaning that other than the doctors themselves and certain office managers, pretty much everyone has to be paid overtime if they work more than 40 hours a week.

“Certain office managers,” Barrett explains, “if they meet or qualify under the exemption, do not have to be paid overtime.”

That determination, which Barrett says is done on a case-by-case basis, is based on an analysis of their responsibilities at the practice. For example, is the office manager an individual who is intimately familiar with the practice financials? Do they have hiring and firing capabilities, and are actively involved in practice operations? If so, they likely fit into the exception category and do not have to be paid overtime.

However, if the office manager is just the most senior administrative person at the practice, and does not have a hand in running the business operation, they will likely be subject to having to be paid overtime.

The only other exception, Barrett says, is certain hygienist in certain states.

“Depending on where you are, if they have a certain amount of schooling or higher education and training, they could potentially fall into an exception and be exempt from overtime,” Barrett says. “But in most cases they’re not exempt from overtime.”

Salaried Employees

Back to the aforementioned example of a salaried employee attending an off-site workshop. In this case, the government will take the annual salary and “back into” an hourly rate based on a 40-hour workweek. The dentist, if he or she required the individual to attend the workshop, would then be obligated to pay that individual time and a half based on the calculated hourly wage.

And there’s a pitfall here, Barrett says, that some dentists fall into.

“I’ve had some dentists who are under the impression that if they pay people really well, they can get around [the overtime], but actually you make it worse,” he says. “The government is going to base the time and a half rate off that higher salary.”

It’s no different with bonuses. If a salaried employee receives an annual bonus, and the dentist neglects paying overtime, the government will back into an hourly rate based on calculations including the bonus.

However, what happens when a holiday falls during the week, as it did this past July when Independence Day fell on a Wednesday? If the practice would normally be open, but closes for the holiday and gives everyone eight hours of holiday pay, that might push a worker from their normal 38 hours up to 46. Do they get paid overtime for those extra six hours?

“The answer is no,” Barrett says. “The law states that you get paid overtime only for hours actually worked.”

Accurate Records

That last point highlights the importance of keeping a thorough and accurate record of employee time worked. For example, if your employees have a lunch break, do you require them to clock in and clock out when they go on break? That’s important, because while they might have been at the practice 45 hours that week, if five of those hours were spent at lunch, you do not have to pay overtime because those were non-working hours—as long as you have accurate documentation.

“This is where people get in trouble,” Barrett explains. “If you are audited, the presumption is that whatever the employee says they worked is what the government is going to try to enforce, unless you can show time records to the contrary.”