REGULAR RATE OF
PAY
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.
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 regular rate must be converted to
an hourly rate. The regular rate described in the FLSA is
the weekly hourly rate at which an employee is actually paid.
Overtime pay is calculated on this regular rate. The
regular rate of pay may be calculated as follows:
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.
Under this seemingly simple
mathematical formula, the primary inquiries will be: (1) the amount
of the employee's total remuneration and (2) the number of hours the
employee worked. However, because the FLSA does not prescribe the
particular forms of remuneration for computing the regular rate,
calculating the regular rate under certain payment schemes is more
complex.
The
different forms of payments
used by employers in paying wages is explained
here.
REGULAR RATE OF PAY
