The Fair Labor Standards Act (FLSA) requires that most of the contractors you place be paid at a rate of 1.5 times the regular pay rate for hours worked over 40 in a work week. Many clients balk at paying extra for these hours. They may argue that overtime does not apply because the worker is in a professional, executive, or administrative position. But even if the worker does meet the stringent requirements to be exempt from overtime under one of those categories, they still must be paid overtime if they are paid on an hourly basis. Only computer-related professionals making at least $27.63 per hour can be paid on an hourly basis and still be exempt from overtime.
As a recruiter, one of your main goals is to keep your client happy so they will continue to give you job orders. But this is one area where you cannot give in. Particularly if you are running your own back-office, you are exposing yourself to legal risks if overtime is not paid properly. So how do you satisfy your client and comply at the same time?
One option is to put a restriction in the employee’s contract that overtime is not to be worked. Keep in mind that if the contractor would work more than 40 hours in a work week, you would still be required to pay the overtime, but you may not be able to bill the client for it.
If you feel like your profit margin is high enough, another way to handle the situation is to give your client a “discount” on the overtime bill rate by charging them less than 1.5 times the regular bill rate. Just remember that the discount comes off of your hourly income.
But sometimes the best course of action is to simply educate the client on the regulations of the FLSA. A good way to do that is to direct them to theDepartment of Labor’s Web pages regarding overtime pay. As a result, you may not just insulate yourself from legal risks but also establish a reputation as a trusted employment expert to your clients.