Medical Transcription: Production Pay and Overtime

Medical transcriptionists are often paid based on their output. In most cases, compensation is based on how many lines a person can transcribe, which is multiplied by their rate per line. Sounds pretty simple, right? Of course, that first assumes you understand how a line is defined. We’ve had that discussion here many times, so we won’t go into it now.

A question that is often asked is when someone is paid for production, what about overtime pay? First, let’s be very clear, overtime is only something that is given to those who work as employees of a company. Does not apply if you are an independent contractor. If you are classified, as some MTs have been, as a “statutory employee” then it applies to you. In the past, there has been a misunderstanding that overtime laws do not apply to the category of statutory employees; This is incorrect.

So how does it work? If you are a paid production employee, are you entitled to overtime pay? In that same light, what other things might apply to compensation?

First, these issues are determined by the Fair Labor Standards Act. Requires that a non-exempt employee be paid at least the minimum wage AND be entitled to overtime pay for all hours worked over 40 in a week. It would seem simple, right?

You might wonder why I also include the minimum wage in this discussion. When someone is just starting out in this profession, it is not uncommon for them to be slower than they will eventually be. If you get paid for production, that significantly lowers your income. However, at no time should your wages be less than the federal minimum wage of $7.25 per hour. That means long gone are the days when new hires were told to just “work until they hit their line quota.” That doesn’t work without making sure you paid at least minimum wage and pay if the person works more than 40 hours in a workweek. Yes, that means you must keep a time sheet for yourself and your employer. It serves as verification of the hours worked. Also remember that your state laws may have a higher minimum wage. If that is the case, that is the rate that should be used as the standard. For example, the minimum wage in Oregon is $8.40, so if you live in Oregon, that’s the number you use. This applies based on where the employee lives and works, not where the employer is located.

Now let’s talk about overtime. You have all been there. The workload suddenly increases and everyone is asked to do a little more to meet client deadlines. In that case, if you are an employee, you are entitled to be paid overtime pay at one and one-half times your normal hourly rate.

I just heard you say, “hourly rate? I get paid per production!” Yes, and you still have an hourly rate. The way to arrive at your hourly rate is to take your total lines, multiply your pay rate, and divide by your total hours worked. That will give you your average hourly rate. Using that rate, you can calculate what you are owed in overtime pay. Let’s make an example for that:

Total lines for the week: 8,500

Pay rate per line: $0.08 per line

Total payment (line times fee): $680.00

Total Hours Worked: 50 (You have 10 hours overtime)

Your average hourly rate: $13.60

Remember that while overtime is paid at one and one-half times the hourly rate, your previous production pay already paid you for the hour, so you are missing “half” of the overtime pay. So, for every hour of overtime pay, you would receive an additional $6.80, for a total of $68.00 ($6.80 for the 10 hours of overtime).

Your Total Payment: $748.00

The law also says that it is not okay to “average” two weeks of hours, nor is it okay to use “compensated time” instead of paying overtime. It also specifically says that an agreement between the employer and the employee does not deny the employee’s right to overtime pay. Many times an employer will say that overtime is not allowed unless approved in advance. Even that does not negate the law. I’ve heard MTs talk about being the only person working a night shift where a statistical report came in and they had to do it, throwing that person into an overtime situation. What is OK is for your employer to ask you to take that extra time off on another day, as long as it is in the same week. If it happened to be the last day of your work week, then overtime applies.

While it is easy to say that employers are responsible here, I believe medical transcriptionists have a responsibility to know and understand what their rights are. When interviewing for a position as an employee, this is definitely a topic to cover! It’s part of fully understanding how you are compensated.