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The
federal wage law (Fair Labor Standards
Act) does not dictate that wages be paid in a particular
form, therefore the employers and employees can agree on
almost any method for payment of wages. However, an employer must
meet the minimum wage and overtime requirements under the
FLSA.
The FLSA requires that overtime earned
by a non-exempt employee must be paid at not less than one
and one-half times the employee’s
“regular rate” of pay. This
sounds simple, but that’s not always the case, and employers
knowingly or unknowingly violate the FLSA by miscalculating
and thus underpaying the overtime wages.
Regular Rate of Pay
The regular rate is
determined by dividing the employee’s total remuneration,
except for statutory exclusions, in any workweek by the
total number of hours actually worked in the workweek.
The
workweek is
a fixed and regularly recurring period of 168 hours
– seven consecutive 24-hour periods. And under FLSA,
total remuneration is all payments “for employment paid to,
or on behalf of, the employee” except for payments
specifically excluded by section 207(e) of FLSA. Some of the payments that
may be excluded are: gifts, payments for time off,
business expenses reimbursed to employees,
retirement plan payments, and discretionary bonuses.
The
“regular rate” is a rate per hour.
If an
employee is paid solely on the basis of a
single hourly rate, the hourly rate is the “regular rate.”
This applies to the majority of cases. However, the “regular
rate” may be different from the basic hourly rate if an
employee is paid any additional monies. For
example, some employees may be eligible for nondiscretionary
premiums payments such as shift differential, weekend
differential, or on-call pay. In such cases, the regular
rate for the purpose of calculating overtime will be more
than the basic hourly rate. The regular rate is found by
totaling all of the sums received by the employee in the
workweek and dividing by the total hours actually worked.
The employee is then entitled to extra half-time pay at this
rate for all hours actually worked over 40 hours in the
workweek.
There are
many different forms of payment used by employers to pay
their non-exempt employees. Some of the commonly used forms
of payments are:
The FLSA defines
overtime pay as one and one-half times
the employee’s regular rate of pay for hours worked in
excess of 40 in a workweek. Therefore, for
the first 40 hours of work the employer pays the at the
employee’s regular rate of pay, and the overtime is then
paid at the rate of time-and-a-half of regular rate for any hours worked
over 40.
Suppose the employee works 48 hours during
a
workweek at an hourly rate of $10 per hour.
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The
first 40 hours are paid at $10 per hour. (40 hr x
$10/hr = $400.00) |
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The
overtime for 8 hours is paid at $15.00 per hour (1.5 x
$10/hr). (8 hr x $15.00 = $120.00) |
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Total
pay for the workweek would be $520.00. ($400.00 +
$120.00) |
In addition to
the hourly pay, if for example, an employee is also paid a
performance bonus of $150 per month, the bonus must be first
be added to the employee’s total wages for the workweek to
calculate the regular rate of pay.
Under the
regulations, all remuneration must first be converted to a
weekly amount, by multiplying the monthly amount by 12 and
then dividing that amount by 52 (weeks/year). Thus, the
$150.00 bonus is converted to a weekly amount: $150.00 x 12
= $1,800 and divide by 52 ($1,800/52 = $34.60). This weekly
amount must then be added to the weekly wages of the
employee to get the total remuneration, as:
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The
employee’s total wages. (48 hr x $10/hr = $520.00) |
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Adding
the bonus to the weekly wages, the total weekly
remuneration is calculated. ($520.00 + $34.60 =
$554.60) |
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The
regular rate of pay for the employee is the
calculated by dividing the total remuneration by
total hours. ($554.60/48 hr = $11.55/hr) |
The overtime
wages are
now calculated using the regular rate of pay of $11.55 per
hour.
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The 8 hours
of overtime would be paid at $17.32 per hour (1.5 x
$11.55/hr). (8 hr x $17.32 = $138.60) |
All non-discretionary bonuses must be included in the
regular rate of pay. A bonus conditionally promised as a
term of employment would certainly be a nondiscretionary
bonus, but there are many other forms of non-discretionary
bonuses. For example, bonuses announced to induce better
productivity, or to decrease absenteeism, or bonuses for
quality and accuracy of work are nondiscretionary, and must
be included in the regular rate. Under the FLSA,
discretionary bonuses must meet five criteria:
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The
sum paid must be discretionary as to the fact of
payment;
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The
amount of payment must be discretionary;
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The
employer must maintain sole discretion as to both fact
and amount of payment;
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Payment must be made at or near the end of the period;
and
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The
payment must not be pursuant to any prior contract,
agreement or promise causing the employee to expect the
payment regularly.
The additional
portion of the employee’s pay at the rate of 50% of the
employee’s regular rate of pay is usually called the
overtime premium. Using the above regular rate of pay above,
the employee’s pay can be separately calculated by using the
overtime premium.
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Employee’s straight-time pay. (48 hr x $11.55/hr =
$554.40) |
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The
overtime premium is calculated by multiplying the
number of overtime hours by 0.5 (50%) of the regular
rate of pay. (8 hr x 0.5 x $11.55/hr = $46.20) |
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Employee’s total pay for the workweek is: $554.40 +
$46.20 = $600.60. |
Even though the
employee’s total pay for the workweek is the same in the
above example, the reason the overtime premium is used
because the regulations use different methods of payment
where overtime premium is used for additional compensation
for overtime work. For example, payment on a commission
basis uses overtime premium for calculation overtime
compensation.
Employees
in many industries are paid differentials such as shift
differential, night-shift differential, or other premium
payments in addition to the hourly wage. These differential
payments must be included in the regular rate of payment to
calculate the overtime compensation for the employee.
Calculation of regular rate of pay and overtime compensation
for an employee paid various differentials is shown in the
example below:
An
employee is paid a base hourly wage of $20 per hour. The
employee is paid a night shift differential of 10% and
Sunday differential of 25%. The employee works the
following schedule:
|
Day |
Mon |
Tue |
Wed |
Thu |
Fri |
Sat |
Sun |
|
Hrs (Day Shift) |
8 |
8 |
8 |
0 |
0 |
8 |
8 |
|
Hrs (Night Shift) |
0 |
0 |
0 |
8 |
0 |
0 |
0 |
Thus, the
employee works a total of 48 hours in a workweek. The
regular rate of pay and overtime is calculated for the
workweek as follows:
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Straight time pay for day shifts (Mon, Tue, Wed, and
Sat) = 32 hrs x $20/hr = $640.00 |
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Night shift (Thu) at 10% differential = $20/hr x 1.1
(10% premium) x 8 hrs = $176.00 |
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Sunday different at 25% = $20/hr x 1.25 (25%
premium) x 8 hrs = $200.00 |
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Total pay for the workweek = $640 + $176 +$200 =
$1,016.00 |
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The total compensation for the workweek for this
employee must be calculated using the regular rate
of pay. |
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The Regular Rate of Pay = total pay/total hours =
$1,016.00/48 =$21.17/hr |
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Compensation for straight time for the 32 hours of
day shifts = $21.17/hr x 40 hrs = $846.80 |
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Overtime compensation for the 8 overtime hours =
$21.17/hr x 1.5 x 8 hrs = $254.04 |
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Therefore, the total compensation for the workweek =
$846.80 + $254.04 = $1,100.84 |
Where
an employee in a single workweek works at two or more
different types of work for which different rates of pay
have been established, the
regular rate for that week is the weighted average of such
rates. That is, the total earnings are computed to include
the compensation during the workweek from all such rates,
and are then divided by the total number of hours worked at
all jobs in that workweek.
For
example, if an employee works 45 hours in a workweek and is paid $9.50 an hour for 5
hours and $15.00 an hour for 40 hours, then the
straight time earnings for the week is $647.50 (5 hours x
$9.50 = $47.50 + $15.00 x 40 = $600.00; a total of $647.50).
The weekly earnings ($647.50) divided by the actual hours
worked (45) reflects a $14.39 per hour regular rate of pay
for that week. Since the $647.50 is the total straight time
pay for all 45 hours, all that is owed for the overtime is
the half-time rate of $7.20 ($14.39 divided by 2), times
five hours, or $36.00. The total wages, including overtime,
owed for that week would therefore be $683.50.
The regular rate
of pay in
no case may
be less than the minimum wage.
Some employers
pay their non-exempt employees a salary. If a non-exempt
employee is paid a salary, the employer and the employee
must have a clear understanding that the salary covers a
fixed number of hours in a workweek. For non-exempt
employees who are paid a salary, the employer must still
calculate the employee’s regular rate of pay, and must
compensate the employee for work over 40 hours in a
workweek. For example, if an employee is hired to work 40
hours in a workweek. If the employee is paid $400.00 per
week, then the employee’s regular rate of pay is $10 per
hour ($400.00/40).
If a non-exempt
salaried employee works more than 40 hours, then he or she
must be paid overtime at one and a half times his regular
rate of pay for all hours worked over 40 in a workweek. For
example, if an employee works 50 hours in a workweek, the
overtime can be calculated as follows:
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Employee’s regular rate of pay is: $400/40 hr =
$10/hr)
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Employee’s total remuneration is: 50 hrs x $10/hr =
$500.00
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The
overtime premium is: 10 hrs x 0.5 x $10/hr = $50)
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Employee’s total pay should be: $500.00 + $50.00 =
$550.00. |
If the salary is
paid monthly or semi-monthly, it must be converted to a
weekly wage. For monthly salary, multiply it by 12 and
divided by 52; and for semi-monthly salary, multiply it by
24 and divide it by 52.
Fluctuating
workweek method of overtime pay is used to pay a fixed
salary for all hours worked, whether an employee more or
less than 40 hours. Under the FLSA the employee must still
be paid overtime wages for weeks in which the employee works
more than 40 hours. The employee is generally paid an
overtime premium (at 50% of the employee’s regular rate of
pay) for the hours over 40 hours in a workweek. But, for
using the fluctuating workweek method of payment, the
employer must follow these rules:
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The employer
and the employee must be a clear understanding between
the employer and the employee that the employee will be
paid using the fluctuating workweek method;
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The employee
must be paid a fixed salary regardless of the number of
hours worked each week;
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The workweek
of the employee must be a fluctuating one; and
-
The employee
must be paid overtime premium for any hours worked over
40 in the workweek.
With the
exception of California the fluctuating workweek method can
be used in all states.
For example, if
an employee works alternating weeks of 48 hours and 72 hours
and is paid $1000 per week, the biweekly wages are
calculated as below:
First
Week
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First
the regular rate of pay is calculated by dividing
weekly salary by hours worked in that week, or
$1000/48 hr = $20.83/hr)
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Overtime
premium is calculated on the 8 hours as: 0.5 x 8 hr
x $20.83/hr = $83.33 |
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Total
pay for the workweek is: $1000 + $83.33 = $1083.33. |
Similarly,
for Second Week
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Regular
rate of pay is: $1000/72 hr = $13.88/hr)
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Overtime
premium for the 32 hours is: 0.5 x 32 hr x $13.88/hr
= $222.22) |
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Total
pay for the second week is: $1000 + $222.22 =
$1222.22. |
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Therefore, the employee’s total wages for the
biweekly pay period would be $2305.55. |
Under this
method, the regular rate of pay is calculated by dividing
the employee’s weekly salary by fixed 40 hours, and
therefore it is a fixed hourly rate.
For example, if
an employee works fluctuating workweeks of 48 and 72 hours
per week. He is paid a salary of $1,000 per week. If the
employee’s salary is divided by 40 hours, then his regular
rate of pay is $25.00 per hour. Thus, the employee’s
overtime premium rate is $12.50 per hour (50% of $25/hr).
When the employee works 48 hours in a week, he is paid $100
as an overtime premium (8 hrs x $12.50/hr). When the
employee works a 72-hour week, his overtime premium pay is
$400 (32 hrs x $12.50/hr). Therefore, the employees’ total
pay for the two-week period is $2,500.00 ($1,000 + $100 +
$1,000 + $400).
The
“Belo Plan” another salary method of payment which includes
expected overtime pay, is named after the court case on
which it is based (Walling v. A.H. Belo Co., 316 U.S.
624 (1942)). The use of this method of payment supposed to
be more restrictive than the fluctuating workweek method.
This method of payment may be used only if all the
conditions below are met:
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The employee must be employed pursuant to a bona
fide individual contract, or pursuant to an
agreement made as a result of collective bargaining; |
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The nature of the employment must necessitate
irregular hours of work; |
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There must be significant variations in weekly hours
of work both above and below the maximum limit of 40
hours of work; |
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The regular rate of pay may not be less than the
minimum hourly rate; |
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The employee’s regular rate of pay can include only
wages for hours worked. It cannot include additional
forms of compensation, such as bonuses, commissions,
housing allowances, etc.; |
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The compensation must include provision for payment
of a maximum number of overtime hours at a rate of
not less than one and half times the regular rate of
pay; and |
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The maximum number of hours worked for the
guaranteed compensation cannot be for more than 60
hours per week. If the employee works more than 60
hours in a workweek, then he or she must be
compensated for the additional hours at the rate of
one and half times the regular rate of pay. (Although
the FLSA sets a limit at 60 hours per week, employer
and employee may agree to a lower limit.) |
It is
important to remember that, the restrictions under
Belo Plan
are more extensive than other salary alternatives for
non-exempt employees. For example,
it must
be the work that necessitates the irregular hours,
not the employer or the employee. Another important
difference between Belo Plans and the fluctuating workweek
method is that under a Belo Plan there must be a contract or
agreement between the employer and the employee, whereas
under the fluctuating workweek method the employee only need
understand the method of payment.
The
employee’s salary under a Belo Plan is determined by an
agreement between the employer and employee as to the
maximum number of hours the employee will work without
additional compensation. The employee’s salary is calculated
for the maximum number of hours at straight time and then
adding the overtime premium at 50% of the regular rate of
pay. So for example, suppose that both employer and the
employee agree to a rate of $10 per hour with a maximum of
60 hours per week. The calculation would be as follows:
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First calculate the wages at straight time: 60 hrs
x. $10/hr = $600.00 |
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Then calculate the overtime premium pay (for 20
hours): 20 hrs x 0.5 x $10/hr = $100.00 |
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Therefore, employee’s weekly salary is: $600.00 +
$100.00 = $700.00 |
So whether
the employee works 60 hours or 30 hours in a workweek, he or
she is still is paid a salary of $700.
An employee is considered to be a tipped employee, only if
he or she: (1) receives tips from customers in excess of $30
a month; (2) is employed in an occupation that
customarily and regularly receives tips; and (3) retains
all the tips received except sharing with members of a
legitimate tip pool.
Under the
FLSA, the amount paid by the employer to a tipped employee
is deemed to be increased by the tips but, that amount
cannot exceed 50% of the minimum wage. If the employer pays
its employees minimum wage or more, the tip credit rules do
not apply.
An
employer of a tipped employee is only required to pay $2.13
an hour in direct wages if that amount plus the tips
received equals at least the federal minimum wage. If an
employee's tips combined with the employer's direct wages of
at least $2.13 an hour do not equal the federal minimum
hourly wage, the employer must make up the difference.
Remember that overtime must be based on an employee's
regular rate of pay and the FLSA requires that an
employee's regular rate of pay can never be less than the
minimum wage. So for example, if a tipped employee is paid
the current federal minimum wage of $5.75 per hour, it can
be broken down into a cash wage of $2.13 per hour and a tip
credit of $3.72 per hour. The tipped employee’s overtime is
calculated by multiplying the $5.75 (employee's regular rate
of pay) by 1.5 and then subtracting the hourly tip credit of
$3.72.
For
example, if a server at a restaurant works 60 hours per week
and the restaurant pays the tipped server a cash wage of
$2.13 per hour, taking the maximum "tip credit" of $3.72 per
hour allowed under federal law. Then, in addition to the
tips paid directly to him by guests, the employer must
compensate the server for the week as follows:
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Employee's regular rate of pay = $5.75
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Overtime rate = Regular rate x 1.5
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Overtime rate = $5.75 x 1.5 = $8.63 |
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Federal Tip credit = $3.72 |
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Overtime rate for Tipped Employee = Overtime Rate – Tip
Credit |
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Overtime for rate Tipped Employee = $8.63 – $3.72 = $4.91 |
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Overtime = rate x overtime hours worked (20 hours |
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Overtime wage = $4.91 x 20 = $98.20 |
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Employee's pay for first 40 (straight-time) hours = 40 x
$2.13 = $85.20 |
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Employee's total weekly pay = $85.20 + $98.20 = $183.40 |
The credit allowed on account of tips may be less than 50%
of the minimum wage, but it cannot be more. The actual
amount of the credit is left to the employer under the
statute, based upon tipping practices and receipts in the
employer's establishment.
Under the FLSA, an employer may not take tip credit until
it has advised the employee of the tip credit provisions and
all tips received by the employee must have been retained by
the employee, except in the case of pooling among employees
who regularly receive tips.
Employers may use tip pools among employees who customarily
and regularly receive tips if either:
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Employees mutually agree to the terms of tip pool; or
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No
employee receives less than 15% of tips the employee
originally receives and contributions are limited to
tips in excess of the tip credit taken.
If an
employee is paid only by commissions, he or she must still
be paid overtime if he or she works more than 40 hours in a
workweek. The commissions paid to the employee are reduced
to an hourly rate and then the overtime is calculated on
that hourly rate. For
example, if an employee is paid $1,500 commission during a
workweek in which he works 50 hours.
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First calculate the regular rate of pay (convert weekly
commission to an hourly rate): $1,500/50 hr = $30/hr |
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Calculate the straight time compensation: 40 hrs x
$30/hr = $1,200.00 |
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Then calculate the overtime: 10hrs x 1.5 x $30/hr =
$450.00 |
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Therefore, the total weekly compensation is: $1,650.00 |
Under the fee basis, the employee is compensated in an
agreed amount for a single job regardless of the time
required for its completion. While a fee basis seem like
piece work compensation but, fee basis arrangements usually
are for unique jobs rather than repetitious jobs done a
number of times during a pay period. For example, an artist
hired to paint a portrait for $1,000 is paid on a fee basis.
An employee paid on fee basis may also be
exempt from the overtime
requirements of the FLSA under the professional employee
exemptions. But remember, for the exemptions to apply, the
employee must meet the salary basis test. And if the salary
basis test for an exemption is not met, then the FLSA
overtime requirements must be met. Payment for purposes of
the professional exemption is based upon determining whether
the payment is at a rate of no less than $455 per week. This
is generally determined by knowing the spent on working on
the job and by reference to a 40-hour workweek.
The weekly pay under the fee basis is calculated by the
following formula:
Fee paid is divided by hours it took to complete the job,
and then multiplied by 40 hours.
For example, if an artist is paid $500 to paint a portrait,
but the portrait takes 60 hours to complete. The weekly
salary is calculated as:
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Weekly salary
= $500/20 x 40 |
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Weekly Basis = $333.33 |
But, this amount is less than the salary-basis requirement
of $455 per week. Thus, the artist must be paid overtime,
which is calculated as:
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First determine the regular rate = Total remuneration/total
hours worked |
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Regular Rate of Pay = $500/60 = $8.33/hour |
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Straight time pay for first 40 hours = $8.33/hr x 40 hrs =
$333.33 |
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Overtime pay at 1.5 times the regular rate of pay =
$8.33/hr x 1.5 x 20 hrs = $249.90 |
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Total compensation for the week = $583.23 ($333.33 +
$249.90) |
An employee is paid on a piece rate when the employee's pay
is calculated on a per unit basis multiplied by the number
of units produced or sold. Employees may also be paid a
piece rate (or production bonus) in addition to pay
determined on some other basis such as hourly or weekly pay.
The piece rate or the production bonus must be included in
the regular rate.
For example, if an employee is paid $1.00 for each widget
produced and guaranteed $6 an hour. Let’s say in week 1, the
employee produces 100 widgets in 30 hours and receives the
guaranteed hourly rate (30 hours x $6 = $180). In this week
the employee is an hourly employee. The following week, the
employee produces 300 widgets in 30 hours and is paid the
piece rate ($300 x $1.00 = $300). In the second week the
employee is a piece rate employee.
The
following is an example of an employee receiving both piece
and hourly rates in the same week:
An
employee works at a piece rate of $0.50 a widget for certain
hours of the workweek and at an hourly rate of $6.00 of the
remaining hours in the workweek. If for example, in week 1,
the employee works 30 hours at the piece rate and makes 600
widgets and then works 30 hours at $6.00 per hour. The
calculation for her pay that week is as follows:
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Straight pay for 30 hours:
$6.00 x 30 hours = $180.00 |
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Piece rate pay: $0.50 per widget x 600 = $300 |
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Piece rate pay converted to hourly pay: $300/30
hrs = $10.00/hr |
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Payment based
on hourly pay from piece rate: 30 hours x $10 = $300 |
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Total pay rate
for the week: $180 + $300 = $480 |
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Regular rate
of pay for that week = $480/60 = $8.00/hr |
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Straight pay
for that week (40 hours) = $8.00 x 40 hrs = $320 |
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Overtime pay
for hours worked over 40 in that week (for 20 hours)
= 20 hrs x $8.00/hr x1.5 = $240.00 |
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Therefore,
total pay for the week = $320.00 + $240.00 = $560.00 |
If the
hourly rate for the piece rate of $0.50 per widget does not
equal $5.75 per hour, then the employer must make up the
difference to insure that the regular rate for the straight
40 hours is at least the minimum wage of $5.75 per hour.
An agreement
between the employer and the employee may provide for a flat
sum for a day's work or for completion of a particular job
or task, without regard to actual hours worked. The
employee's regular rate is calculated by adding the monies
received during the workweek and dividing by the total hours
actually worked. This is the regular rate upon which
overtime must be computed.
There are
different forms of task basis agreements but there are two
usual forms: (1) It is determined that an employee should complete a particular task in 8 hours. Upon
the completion of the task the employee is credited with 8
“hours” of work though in fact he may have worked more or
less than 8 hours to complete the task. At the end of the
week an employee entitled to statutory overtime compensation
for work in excess of 40 hours is paid at an established
hourly rate for the first 40 of the “hours” so credited and
at one and one-half times such rate for the “hours” so
credited in excess of 40. The number of “hours” credited to
the employee bears no necessary relationship to the number
of hours actually worked. It may be greater or less.
“Overtime'” may be payable in some cases after 20 hours of
work; in others only after 50 hours or any other number of
hours.
(2) A similar
task is set up and 8 hours' pay at the established rate is
credited for the completion of the task in 8 hours or less.
If the employee fails to complete the task in 8 hours he is
paid at the established rate for each of the first 8 hours
he actually worked. For work in excess of 8 hours or after
the task is completed (whichever occurs first) he is paid
one and one-half times the established rate for each such
hour worked. He is owed overtime compensation under the Act
for hours worked in the workweek in excess of 40 but is paid
his weekly overtime compensation at the premium rate for the
hours in excess of 40 actual or “task” hours (or combination
thereof) for which he received pay at the established rate.
“Overtime” pay under this plan may be due after 20 hours of
work, 25 or any other number up to 40.
The employees
are in actual fact compensated on a daily rate of pay basis.
In plans of the first type, the established hourly rate
never controls the compensation which any employee actually
receives. Therefore, the established rate cannot be his
regular rate. In plans of the second type the rate is
operative only for the slower employees who exceed the time
allotted to complete the task; for them it operates in a
manner similar to a minimum hourly guarantee for piece
workers. On such days as it is operative it is a genuine
rate; at other times it is not.
Since the
premium rates (at one and one-half times the established
hourly rate) are payable under both plans for hours worked
within the basic or normal workday (if one is established)
and without regard to whether the hours are or are not in
excess of 8 per day or 40 per week, they cannot qualify as
overtime premiums. They must therefore be included in the
regular rate and no part of them may be credited against
statutory overtime compensation due. Under plans of the
second type, however, where the pay of an employee on a
given day is actually controlled by the established hourly
rate (because he fails to complete the task in the 8-hour
period) and he is paid at one and one-half times the
established rate for hours in excess of 8 hours actually
worked, the premium rate paid on that day will qualify as an
overtime premium.
An example
Assume the following facts: The employment agreement
establishes a basic hourly rate of $5 per hour, provides for
the payment of $7.50 per hour for overtime work (in excess
of the basic workday or workweek) and defines the basic
workday as 8 hours, and the basic workweek as 40 hours,
Monday through Friday. It further provides that the
assembling of a machine constitutes a day's work. An
employee who completes the assembling job in less than 8
hours will be paid 8 hours' pay at the established rate of
$5 per hour and will receive pay at the “overtime” rate for
hours worked after the completion of the task. An employee
works the following hours in a particular week:
|
Day |
Mon |
Tue |
Wed |
Thu |
Fri |
Sat |
Sun |
|
Hours Spent on Task |
6 |
7 |
7 |
9 |
8.5 |
6 |
0 |
|
Day's Pay under Contract |
$40 |
$40 |
$40 |
$40 |
$40 |
$60 |
0 |
|
Additional Hours Spent |
2 |
0 |
2 |
0 |
0.5 |
0 |
0 |
|
Additional Pay under Contract |
$15 |
0 |
$15 |
$7.5 |
$7.5 |
0 |
0 |
In this example
the employee has actually worked a total of 48 hours and is
owed under the contract a total of $305 for the week. The
only sums which can be excluded as overtime premiums from
this total before the regular rate is determined are the
extra $2.50 payments for the extra hour on Thursday and
Friday made because of work actually in excess of 8 hours.
The payment of the other premium rates under the contract is
either without regard to whether or not the hours they
compensated were in excess of a bona fide daily or weekly
standard or without regard to the number of overtime hours
worked. Thus only the sum of $5 is excluded from the total.
The remaining $300 is divided by 48 hours to determine the
regular rate--$6.25 per hour. One-half this rate is due
under the Act as extra compensation for each of the 8
overtime hours--$25. The $5 payment under the contract for
actual excess hours may be credited and the balance--$20--is
owed in addition to the $305 due under the contract.
The "regular
rate" for a flat rate employee is calculated essentially the
same way as a commissioned or piece rate employee, dividing
total earnings for the week by the hours worked during the
week. It is important that an accurate record of "actual"
hours worked be kept, along with the flat rate hours, so
that the regular rate can be computed. Here is an
example of a flat rate employee who earned $500.00 during a
week, but actually worked 50 hours to earn it.
|
Day |
Mon |
Tue |
Wed |
Thu |
Fri |
Sat |
Sun |
|
Flat Rate Hours Agreed Upon |
8 |
8 |
8 |
8 |
8 |
0 |
0 |
|
Additional Hours Spent |
10 |
10 |
10 |
10 |
10 |
0 |
0 |
|
|
Flat
Rate Pay Earned = $500.00 |
|
|
Flat
Rate Hours = 40 |
|
|
Actual
Hours Worked = 50 |
|
|
Overtime
Hours Worked = 50-40 = 10 hours |
|
|
Regular
Rate of Pay = Total Pay/Total Hours Worked = $500/50
= $10/hr |
|
|
Overtime
premium (50%) = $10 x. 0.5 = $5/hr |
|
|
Overtime
Owed = $5 x 10 = $50.00 |
|
|
Therefore, the total pay for the workweek must be =
$500.00 + $50.00 = $550.00
|
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