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Business Math: Calculating the Regular Rate for Overtime

 

Many businesses have employees that get paid multiple pay rates during their shift. This happens when they perform more than one specific job function. For those employees, the hourly rate depends on the job they are working on at the time. Hourly rates by job can vary when employees work in the construction, plumbing, caretaking, landscaping, and many other industries. When you have an employee that works under different rates, you need to make sure that you are calculating their regular pay rate properly for overtime. Unless your employee is specifically exempted, employees working at more than one job rate covered by the FLSA must receive overtime pay at their regular rate and not at the specific rate for the job they are doing when overtime is incurred.

What is the Regular Rate

The regular rate is an average rate of pay used for overtime calculations and is tallied weekly whenever overtime is earned. The rate is based on the number of hours worked per job at each job’s individual pay rate. The regular rate does not include expenses, premium payments, or any extra costs and cannot be less than minimum wage.

Determining the Regular Rate for Overtime

To determine the regular rate for a given workweek, divide the total pay calculated by job and without the overtime premium, by the total number of hours actually worked. Once you have the regular rate, you can use it to calculate the employee’s total pay for the week as if the employee had only worked a single job.

An Example Using the Regular Rate

Your employee worked 46 hours this week. He worked for 32 hours on Job A at $15 per hour and 14 hours at Job B for $10 per hour.

To calculate the regular rate, you would multiply his hourly wage for each job by the hours worked at each job.

  • 32 hours X $15 per hour = $480 for Job A
  • 14 hours X $10 per hour = $140 for Job B
  • The employee’s total compensation before overtime is then $620

Note that this amount is not used to pay the employee, but is only used to calculate the regular rate of pay. To calculate the regular rate, divide the total compensation above by the total number of hours worked

  • $620 / 46 hours = $13.48

The regular rate of pay is therefore $13.48 per hour.

Calculating Weekly Pay with the Regular Rate

Once you have the regular rate, you can use it to calculate the employee’s weekly pay directly.

  • Regular pay for the first 40 hours: $13.48 x 40 hours = $539.20
  • Overtime pay for 6 hours: $13.48 x 1.5 overtime premium x 6 hours = $121.32
  • Then add the two amounts: $539.20 + $121.32 = $660.52

The employee’s total weekly pay for this week is $660.52.

 

Timesheets.com helps you calculate the time worked at multiple jobs easily. Create reports to see the exact data you need.

 

Free online timesheets

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