How Is The Overtime Pay Rate Computed?

Q : How is the overtime pay rate computed?

A : The main issue is to determine the regular rate for the employee in question. When an employee is paid an hourly rate, the employee's regular rate and hourly rate are the same. For example, an employee who is paid $6.00 an hour and who worked 43 hours in the last work week, would be owed $27 in overtime pay.

($6.00 regular rate x 1 _ = $9.00 overtime rate; $9.00 x 3 (hours worked in excess of 40) = $27). The employee's salary for that week would be $267 ($6 x 40 hrs. = $240 + $27 (overtime) = $267).

When an employee is paid a salary or commission, the employee's compensation must be converted to an hourly rate. This conversion is accomplished by dividing the employee's compensation for the week by the number of hours worked in that week. For example, an employee who was paid $250 a week, and worked 45 hours the last week, earned a regular rate of $5.55. The employer, therefore, would owe the employee an additional $41.62 for the 5 hours of overtime worked in that last week ($5.55 x 1 _ = $8.32 x 5 (hours worked in excess of 40) = $41.62). The employee's salary for that week would be $291.62.

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