Regular Rate of Pay for Calculating Overtime Pay

posted by Neil Klingshirn  |  Jul 14, 2009 5:13 PM [EST]  |  applies to Ohio

Overtime is calculated based on the employee’s actual, or “regular rate” of pay.  The regular rate of pay includes not only the normal hourly rate, but all compensation for employment paid to, or on behalf of, the employee.

Exclusions from Regular Rate of Pay

The regular rate of pay does not include:

1. gifts or rewards that are not measured by or dependent on hours worked, production, or efficiency;
2. vacation, holiday, illness or other similar pay; payments for traveling or other expenses properly reimbursable by the employer; and other similar payments to an employee which are not made as compensation for hours of employment;
3. Bonuses for a given period if:
   
   • the fact that payment is to be made and the amount of the payment are determined at the sole discretion of the employer at or near the end of the period;
   • the payments are made pursuant to a bona fide profit-sharing plan or 
   • the payments are talent fees paid to performers, including announcers, on radio and television programs;
     
4. fringe benefit contributions;
5. extra compensation provided by a premium rate paid for certain hours worked by the employee in excess of eight in a day or in excess of 40 in a week;
6. extra compensation provided by a premium rate paid for work by the employee on Saturdays, Sundays, holidays, or days of rest that is not less than one and one-half times the normal rate of pay;
7. extra compensation provided by a premium rate paid to the employee under a contract for work outside of the hours specified by the contract where such premium rate is not less than one and one-half times the normal rate or pay; or
8. an increase in value of qualifying stock options
   

20 USC 207.

Regular Rate When Paid Two or More Rates of Pay

Where an employee in a single workweek works at two or more different types of work for which different non-overtime rates of pay (of not less than the applicable minimum wage) have been established, his or her regular rate for that week is the weighted average of such rates. That is, his or her  total earnings (except for the above exclusions) are computed to include his or her compensation during the workweek from all such rates, and are then divided by the total number of hours worked at all jobs. 29 CFR 778.115.

External Links

Links to external sites with additional information about this topic.

• 29 USC 207
  
• 29 CFR 778.108, the Regular Rate.
• 29 CFR 778.115

posted by Neil Klingshirn  |  Jul 14, 2009 5:13 PM [EST]  |  applies to Ohio