Counting to 40 with PTO for overtime purposes in a workweek

Q         Can you clarify whether we must pay employees overtime if their 40 straight-time hours include paid time off (PTO) and then they work above that 40 hours?

A   Starting with the basic overtime law under the Fair Labor Standards Act (FLSA), all nonexempt employees shall be paid overtime (time and one-half their regular rate) for all “hours worked” over 40 hours in a workweek. This means that, unless there’s an employment agreement stating otherwise (with some exceptions in certain industries), all time when they are required to be on duty and are “suffered or permitted to work” counts towards the 40-hour workweek for calculating overtime purposes. PTO (such holiday pay, vacation, or personal days) is not “hours worked” for purposes of overtime pay because they aren’t on duty or permitted to work.

Often, an employee will take eight hours of PTO for a personal day, work nine hours a day over the next 4 days (36 hours), and then question why he didn’t receive four hours of overtime pay for the week. While his paycheck will reflect that he was compensated for the equivalent of 44 hours for that week, eight of those hours weren’t “hours worked” under the FLSA. Only 36 hours were “hours worked” that week, so no overtime compensation was required to be paid for any hours that happen to put the employee above the basic 40-hour threshold for the workweek.