What Is the Federal Law for Overtime With Vacation Time?

The United States Department of Labor administrates the Fair Labor Standards Act, which mandates the federal minimum wage, overtime, child labor and record-keeping laws. Federal overtime laws apply to all nonexempt employees -- those that are not exempt from the FLSA overtime pay requirements. In most cases, hourly employees qualify for overtime. The employer gives vacation time at its discretion.

The FLSA requires employers to pay overtime at 1 1/2 times the employee’s regular pay rate. Regular hours are hours worked up to 40 for the workweek; overtime hours are work hours that exceed 40 for the workweek. The FLSA does not require double-time pay (twice the employee’s regular pay rate) for extra hours worked -- it is a matter between the employer and the employee. Some employers choose to pay double-time to employees who work on holidays.

Federal law does not require employers to give employees vacation time. Many employers give paid vacation time as an incentive to retain quality workers. They also understand that employees tend to perform better when given some time off. In the presence of a government contract that adheres to the policies of the McNamara O’Hara Service Contract Act or the Davis-Bacon and Related Act, conditions for fringe benefits such as vacation pay is included in the contract.

The employee must physically work at least 40 hours for the workweek to qualify for overtime. Therefore, if she works 35 regular hours and takes 6 vacation hours, the employer pays the entire 41 hours at her regular pay rate. But if she works a total of 44 hours between Monday and Thursday of the workweek and takes eight vacation hours on Friday, the employer pays 40 hours as regular time at her regular pay rate, eight hours as vacation time at her regular pay rate, and four hours as overtime at her overtime rate.

Federal law does not require the employer to pay overtime for hours worked on Saturdays, Sundays, regular days of rest or at nights, except if the employee works past the 40 hours for the week on these days. The employer pays overtime with the employee’s regular work hours on the next regularly scheduled payday.