How should overtime pay be handled on payroll?

Handling Overtime Pay on Payroll in Missouri

In Missouri, managing overtime pay on payroll requires adherence to both federal and state regulations to ensure compliance and accurate employee compensation.

Overtime Pay Requirements

As of 2026, Missouri follows the federal Fair Labor Standards Act (FLSA) guidelines for overtime. Employees must be paid at least one and one-half times their regular hourly rate for all hours worked over 40 in a workweek.

Operational Steps for Payroll Processing

• Track Hours Accurately: Use reliable timekeeping systems to record total hours worked each week, including overtime.
• Calculate Overtime Rate: Determine the employee’s regular hourly rate, then multiply by 1.5 for overtime hours.
• Include Overtime in Payroll: Ensure overtime pay is calculated separately and added to the employee’s gross wages in the payroll system.
• Update Payroll Records: Maintain detailed records of hours worked and overtime paid for compliance and reporting purposes.

Additional Considerations

• Exempt vs. Non-Exempt Employees: Confirm employee classification to determine overtime eligibility. Exempt employees typically do not receive overtime pay.
• Payroll Taxes: Calculate and withhold appropriate federal and state payroll taxes on overtime wages.
• Reporting Requirements: Keep overtime payment records accessible for audits and reporting to the Missouri Department of Labor if requested.
• Automation: Consider payroll software that automatically calculates overtime to reduce errors and improve efficiency.