Didn’t pay overtime correctly? Here’s how to remedy the error

Q          A nonexempt employee hasn’t been paid correctly for overtime, and we discovered we’ve been noncompliant with overtime pay requirements for a number of nonexempt employees. How can we correct internal underpayments properly, and are there legal risks in proactively remediating the issue that could expose us to penalties?

Nonexempt employees are entitled to 1.5 times their regular rate for all hours worked in excess of 40 each workweek. The statute of limitations for overtime violations in Massachusetts is three years. 

To correct the underpayment of overtime properly, you’ll need to look at payroll records for the affected nonexempt employees for the past three years to see how long the error has persisted. After determining how long the affected employees have been improperly compensated for overtime, you’ll need to calculate the compensation the affected employees should have received. After calculating the compensation owed to each employee, you should consider taking steps to remedy the situation. 

Federal law: Under federal law, paying employees the overtime wages they’re owed is sufficient to remedy the violation.