Premium Pay Law and Legal Definition

Premium pay is a higher rate of pay paid to those working weekends, holidays, vacation days, or working during hours deemed less desirable. Federal and state laws, which vary by state, regulate premium pay.

For example, for workers subject to the Fair Labor Standards Act (FSLA), the Act requires:

  • As a general rule, work involving premium pay should be authorized or ordered in advance. However, overtime may be approved retroactively (normally not later than the next workday) where compelling reasons make it impossible or impracticable to obtain prior approval.
  • Work schedules may not be changed expressly to include or exclude an employee from entitlement to premium pay or to increase or decrease such entitlements.
  • Persons designated to authorize overtime may not authorize overtime for themselves.