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Overtime calculations. Federal

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  • Overtime calculations. Federal


    I have a question on overtime pay. I know for hours over 40 in a week, we are required to include such things as incentive pay, additional pay, etc. My question is...when figuring an employee's straight time pay over 40 (They worked 45 hours, but took 8 hours of sick, which is not counted toward OT calculations.), do i need to include the additional pay in calculating straight-time over 40, or do i use their basic rate of pay?

    Does anyone know the wage and hour ruling on this?


  • #2
    Your starting point is the workweek. You take all hours worked in the workweek. You do not care about hours paid but not worked, such as vacation, sick and such. Then you take all money (excluding the OT premium) earned by those hours WORKED. Aggregate of the money earned by those hours worked (excluding the OT premium) divided by total hours worked gives a rate called Regular Rate of Pay (RRP). You owe a 50% premium against RRP for all hours actually worked past 40 in the workweek.

    Example. Bob works 25 hours @ $10/hr, 25 more hours @ $12/hr, plus a $100 Non-Discretionary (ND) bonus payment, plus 8 hours of vacation @ $10/hr. The vacation is legally nothing, not the hours or the dollars. So we have 50 hours actually worked and $650 ($250+$300+$100) for money earned based on those hours actually worked (excluding OT premium. RRP equals $650 / 50 hours = $13/hr. In addition to the $650, we owe the employee OT premium of 10 hours x $13/hr x 50% = $65, for a total of $715.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)