Calculating Overtime Pay
In a lawsuit situation, damages means the total recovery. Total recovery can include back pay due, liquidated damages (double the amount owed), attorney’s fees, and sometimes punitive damages.
The time period involved is usually two years prior to filing the lawsuit. The first step is to calculate the difference between what you were paid and what you deserve to be paid.
After the examples below, see definitions of hours worked and workweek. These terms have specific meanings in the context of calculation overtime pay.
For each hour worked over 40 hours, pay should equal at least one and a half times the employee’s regular rate of pay. Here are some examples of how to calculate overtime pay based on how you are paid during a 40-hour work week:
If more than 40 hours are worked, at least one and a half times the regular rate for each hour over 40 is due.
Example: An employee paid $8.00 an hour works 44 hours in a workweek. The employee is entitled to at least one and a half times $8.00, or $12.00, for each hour over 40. Pay for the week would be $320 for the first 40 hours, plus $48.00 for the four hours of overtime–a total of $368.00.
The regular rate of pay for an employee paid on a piecework basis is obtained by dividing the total weekly earnings by the total number of hours worked in that week. The employee is entitled to an additional one-half times this regular rate for each hour over 40, plus the full piecework earnings. Another way to pay pieceworkers for overtime, if agreed to before the work is performed, is to pay one and a half times the piece rate for each piece produced during the overtime hours. The piece rate must be actually paid during non-overtime hours and must be more than the minimum wage.
Example: An employee paid on a piecework basis works 45 hours in a week and earns $315. The regular rate of pay for that week is $315 divided by 45, or $7.00 an hour. In addition to the straight-time pay, the employee should also receive $3.50 (half the regular rate) for each hour over 40 — an additional $17.50 for the 5 overtime hours — for a total of $332.50.
Generally speaking, salaried employees are not due overtime under the FLSA. However, there are some common employer mistakes which may entitle you to overtime. See a review of salaried employee problems at OvertimeScams.us. If you are entitled to overtime, you would calculate the rate of pay by dividing the regular salary by the number of hours for which the salary is intended to pay.
If, under an employment agreement, a salary meets the minimum wage requirement in every workweek and is paid as straight time for whatever number of hours are worked in a workweek, the regular rate is obtained by dividing the salary by the number of hours worked each week.
Examples: An employee’s hours of work vary each week and the agreement with the employer is that the employee will be paid $420 a week for whatever number of hours of work are required. Under this agreement, the regular rate will vary in overtime weeks.
- If the employee works 50 hours, the regular rate is $8.40 ($420 divided by 50 hours). In addition to the salary, half the regular rate, or $4.20 is due for each of the 10 overtime hours, for a total of $462 for the week.
- If the employee works 60 hours, the regular rate is $7.00 ($420 divided by 60 hours). In that case, an additional $3.50 is due for each of the 20 overtime hours, for a total of $490 for the week. If a salary is paid on other than a weekly basis, the weekly pay should be determined in order to compute the regular rate and overtime pay.
- If the salary is for a half month, it must be multiplied by 24 and the product divided by 52 weeks to get the weekly amount. A monthly salary should be multiplied by 12 and the product divided by 52.
If you have been paid a bonus based on productivity or some other premium for working a particular shift, depending on the circumstances that additional pay could be included in the calculation of what should be multiplied by “time and a half.”
Example: An employee makes $12.00 per hour “base pay.” The employee receives a shift pay bonus of $250.00 (or $6.25 per hour) for the week. The actual rate of pay for overtime calculation pay purposes is $18.25 per hour and not $12.00 per hour.
If the employee worked an additional 10 hours, the gross overtime pay due the employee should be $273.75 (10 hours times $18.25 per hour regular pay times “time and a half”) and not $180.00 (10 hours times $12.00 per hour regular pay times “time and a half”).
Overtime does not have to be paid for more than eight (8) spent working in a day, although many employers do this as an incentive. Rather, federal requirements look at an entire work week, usually a fixed period of 168 hours or seven consecutive 24-hour work periods.
Overtime pay is usually 1 ½ the regular rate of pay in effect for that workweek. This is not limited to the standard pay for an employee. Regular rate of pay may include supplemental payments made such as shift pay, bonuses, and commissions. Plus, if the employee worked at several different rates of pay, the different rates of pay should be averaged over the week to determine the actual rate of pay for overtime calculations.
The employer must divide the total earnings for the week by the total hours to find the effective rate of pay and use that amount to calculate the overtime premium rate.
Note: Federal regulations can contain special exceptions for certain situations.
|Example:||Total hours worked||56|
|Base pay for first half of week||$15 / hr. for 28 hrs.|
|Base pay for second half of week||$17.50 / hr. for 28 hrs.|
|Subtotal – pay for the week||$1,007.00|
|Regular rate of pay ($1,007.00 divided by 56)||$17.98 / hr.|
|Premium rate (½ regular rate)||$8.99 / hr.|
|Overtime (premium pay x overtime hours)||$143.84|
|Total gross pay (before taxes)||$1,150.84|
The regular rate cannot be less than the minimum wage required by federal law and some state law.
Covered employees must be paid for all hours worked in a worked. In general, “hours worked” includes all time an employee must be on duty, or on the employer’s premises or at any other prescribed place of work. Also included is any additional time the employee is allowed or permitted work.
Workweek. A workweek is a period of 168 hours during 7 consecutive 24-hour periods. It may begin on any day of the week and at any hour of the day established by the employer. Generally, for purposes of minimum wage and overtime payment each workweek stands alone; there can be no averaging of 2 or more workweeks. Employee coverage, compliance with wage payment requirements, and the application of most exemptions are determined on a workweek basis.
Another Warning: The examples provided on this page are very simple. Federal regulations offer employers alternatives in certain situations which can be very complex. In most cases, a detailed review of the employees pay structure and review of Federal law is required before a legal opinion can be determined.