Computing Overtime

Editor's Note: Many variations on time-and-a-half.

Michael CardmanOverview: When an employee is paid just a single hourly rate, overtime laws make it easy enough to calculate overtime. But things get a little more complicated when different employment arrangements are involved.

For example, employers must take special care when calculating how much overtime nonexempt employees are entitled to if they are paid pay bonuses, day rates, salaries, piece rates, or on-call pay.

Also, employees who work at two or more different types of work for which different rates have been established must be paid a weighted average of those two rates.

Trends: More and more employers are outsourcing payroll or using HRIS systems that automate the calculation of overtime. It's important for HR to familiarize itself with different types of overtime, so it can spot any potential trouble spots that a third party payroll provider or software system might overlook.

Author: Michael Cardman, Legal Editor

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