How to Calculate Overtime Pay

If you feel your workplace rights have been violated, including any unpaid overtime, you can file a worker rights complaint with L&I. Tips and service charges – Tips are amounts freely given by a customer to an employee. Service charges usually are added to a customer’s bill for services related to food, beverage, or entertainment, and may be payable to workers. If you’re not receiving overtime pay to which you’re legally entitled, bring the issue to the attention of your supervisor or human resources department. If that doesn’t work, you may wish to contact an attorney to explore your legal options. An employee who is paid on a salary basis must earn at least $684 per week (equivalent to $35,568 per year). You can either file a wage claim with the Division of Labor Standards Enforcement (the Labor Commissioner’s Office), or you can file a lawsuit in court against your employer to recover the lost wages.

Some states have regulations for overtime and other labor laws that exceed those of the federal government. Check with yourstate’s labor departmentto review state labor laws, or check with your employment attorney.

Effect of multiple positions on the calculation

The average regular rate of pay received by the employee during the last three years of employment. The employee is paid $507.80 in overtime pay ($50.78 x 10 hours overtime). The hourly rate of overtime pay is 1.5 x $33.85, or $50.78 per hour. An employer may use the monthly method to calculate the hourly salary rate by dividing the monthly salary by the number of work hours in the month, if the employer obtains the employee’s consent to this method before work is performed. This gives the employee a total of 50 paid hours during the week. The employee is entitled to 10 hours of compensatory time and no overtime. Holidays or other paid leave taken during a workweek are not counted as hours worked in computing the number of overtime hours.

• Though it initially ruled that overtime didn’t kick in until an employee had worked 44 hours a week, lawmakers amended the FLSA two years later to reflect the move to a 40-hour workweek, lowering the threshold for overtime pay.
• Their ability to receive overtime depends on whether they are exempt employees or a nonexempt employee.
• A bonus announced to employees to induce them to work more efficiently or to remain employed with the employer.
• As previously stated, the federal rate is time and one-half the regular rate of pay, however, states that have their own laws may require daily overtime payments or double time premium pay.
• The 2021 Legislature passed ESSB 5172, a bill expanding overtime protections to all agricultural employees, including agricultural piece-rate employees, with a three-year phase-in schedule.
• Additionally, under most circumstances the employer may discipline an employee, up to and including termination, if the employee refuses to work scheduled overtime.

Consider an example where a salaried employee makes $300 for a 30-hour workweek and works 50 hours. Take the $300 salary and divide it by 30 hours to get a regular rate of $10 per hour. For salaried employees whose fixed workweek is less than 40 hours, the employee needs to be compensated for the straight time he or she worked. In other words, determine how much to pay the employee for the number of hours worked over the fixed workweek but under 40 hours. Even if an employee is exempt from overtime under state law, it is important to check if federal law would still require overtime compensation.An employer and employee cannot make any agreement to violate the overtime law. The FLSA requires employers to keep records of payments to employees, including overtime pay. In the case of an audit, an employer must be able to prove payment of overtime that meets FLSA requirements.

An Important Change in Overtime Regulations for Exempt Employees

Note that the FLSA has an exception to this rule that allows employer to pay overtime via the “rate in effect.” Most states, however, do not permit this method. A salary is intended to cover straight-time pay for a predetermined number of hours worked during the workweek. Under federal law, to calculate a nonexempt employee’s regular rate of pay, divide the weekly salary by the total number of hours worked. Employees in California are entitled to double-time for working more than twelve hour workdays or more than eight hours on the seventh consecutive workday of a single workweek. The eight-hour overtime limit in California frequently gives rise to wage-and-hour litigation for violations of state labour laws.

Effective January 1, 2020,new how to calculate overtime pay rules require that salaried employees making less than a specific amount qualify for, and must be paid, overtime. The new rule has a higher salary level for exemption from overtime than the previous rule; that is, more employees qualify for overtime.

Important Terms Related to Overtime Pay Calculations

Before establishing a double time policy, think about the service your business offers. For example, some businesses might need to be open every day, so you might want to offer double time for holidays like Thanksgiving and New Year’s Day. A job duty that would be considered exempt would include high-level responsibilities. For example, this could be executive, administrative or computer-based duties. Overtime works for both employees on an annual salary and hourly employees. However, with more and more companies implementing policies that discourage or prohibit overtime, it’s possible that the days of working long hours for extra pay are numbered. Some argue that it’s unfair to ask people to put in extra hours — even with compensation.

• You can find the full list of exempt duties on the Department of Labor’s website.
• Other jobs—such as farmworkers, movie theater attendants, railroad and air carrier employees—are exempt from overtime coverage.
• Some salaried employees have a fluctuating workweek with no set hours.
• However, in circumstances where the workweek is less than 40 hours, the law does not require payment of the overtime premium unless the employee works more than eight hours in a workday or more than 40 hours in a workweek.
• For example, an employee who earns $400 for a 40-hour workweek has a regular rate of $10/hour ($400/40 hours).