Determine How Much Overtime an Employee Is Owed
When to Use This Workflow
Use the Determine How Much Overtime an Employee Is Owed workflow to ascertain whether a nonexempt employee must be paid overtime and, if so, calculate how much he or she is due.
This workflow walks an employer through the process of:
- Establishing the appropriate overtime threshold, whether it is the standard 40-hour limit that applies under the Fair Labor Standards Act and most state laws, or state-specific limits that apply in Alaska, California, Colorado, Kentucky, Massachusetts, Nevada, Oregon and Rhode Island;
- Adding up forms of compensation that must be included in an employee's regular rate of pay, including base compensation such as hourly wages or salaries, as well as other forms of remuneration such as commissions or on-call pay; and
- Calculating the overtime premium due to the employee.
An employer should follow the steps in the workflow carefully and consult with counsel when appropriate.
- Add up Base Compensation attributable to the workweek in question.
- Add up any Other Forms of Compensation that must be included in the regular rate of pay.
- Divide total straight-time earnings by the number of hours worked to determine the regular rate of pay.
- Multiply the number of overtime hours by one-half of the regular rate to calculate the overtime premium.
- Add the overtime premium to total straight-time earnings to calculate total pay for the workweek.