Employers may choose to use different rates of pay (see my blog post on determining employee drive and travel time compensation) and they also may choose to use several different methods of pay for any given employee. In doing so, the same principles apply to the calculation to determine the rate for overtime purposes: total money earned divided by total hours worked.
EXAMPLE:
Larry the roofer worked 46 hours in one week. He earned $11/hr. and also received $15 per square and completed 3 squares. Additionally, since he finished the job in the allotted 4 days estimated for the job, he received a $200 bonus* (so here we have three methods - hourly, piece rate and a bonus).
11 x 46 = $506
15 x 3 = $45
506 + 45 + 200 = $751
751 divided by 46 = $16.33 (regular rate for this week)
The $751 covers the straight time pay for all 46 hours so now just the additional half time is due for the 6 hours of OT
16.33 x .05 = $8.17
8.17 x 6 = $49.02 (amount of OT due)
751 + 49.02 = $800.02 (total gross wages for the week)
NOTE: These are based on federal overtime laws. Several states have special overtime provisions as well.
* There are very limited circumstances that bonuses are not included in the rate for OT purposes.
If you have specific questions on calculating employee pay and overtime or are interested in ways that FrankCrum can help you with HR and wage and hour issues you’re currently facing, please contact us. We’re here for you!