While many small business owners are rightfully wary of running afoul of federal labor laws, the Fair Labor Standards Act isn’t so restrictive as to interfere with basic business functions such as scheduling and payroll cycles. While paying employees on a biweekly schedule may introduce small wrinkles into overtime considerations and calculations, keeping your business operating within the overtime laws isn’t difficult.

Overtime: The Basics

The Fair Labor Standards Act establishes a 40-hour workweek as the standard unit of measuring hours for overtime considerations. Employees who work more than 40 hours in any given workweek must receive overtime pay equal to 1.5 times their normal rate of pay for all overtime hours. For example, a worker who regularly earns $10 per hour and works 45 hours in a workweek would receive her regular pay rate for the first 40 hours she worked, and overtime pay of $15 per hour for the final five hours. An employer may choose when his workweek begins and ends, but it must be the same consecutive 168-hour period each week once it’s established.

Pay Schedules and the Law

The FLSA doesn’t establish regulations on the manner in which you pay your employees, so you can establish a semi-monthly, biweekly, monthly or any other payment schedule that fits your company’s financial and staffing needs without violating the FLSA. Some states’ labor laws require that employers issue paychecks a minimum number of times per month or meeting a minimum frequency – monthly or biweekly, for example – so consult your state’s Department of Labor to ensure that your pay period schedules comply with local laws.

Semi-Monthly Pay Periods and Workweeks

In circumstances when employees receive payment for their work hours immediately following the workweek, rather than receiving a delayed paycheck, the end of a semi-monthly pay period may fall in the middle of an established workweek, splitting it into two pay periods. In this case, calculate hours normally for the first part of the workweek that applies to the first pay period. On the following pay period, determine if the employee worked any overtime during the workweek, including hours she received pay for on the prior pay period.

Compensatory Time

While only governmental agencies can provide time off in lieu of overtime payments under FLSA restrictions, employers have a little leeway to adjust work schedules to compensate for the extra hours and avoid overtime wages. Employers may reduce the length of a worker’s shifts on an hour-for-hour basis only if the reduction is made in the same week that extra hours are worked. For example, an employee who works an additional four hours on Monday may receive four hours of comp time on Friday to keep his workweek hours at 40 for the week. If the employer wants to move the compensatory time to another workweek, it must be made in the same semi-monthly pay period, the employee must receive his standard pay for both weeks, and compensatory time be given on a 1.5-to-1 ratio. For example, the employee who worked an additional four hours on Monday could receive six hours off in compensation (4 multiplied by 1.5) the next week, so long as both workweeks were in the same pay period and he receives his regular pay both weeks.