FLSA Overtime Calculation

Fair Labor Standard Act Overtime Calculation

Under the FLSA, calculate overtime by multiplying the employee’s “straight time rate of pay” by all overtime hours worked; then add one-half of the employee’s “hourly regular rate of pay” and multiply all overtime hours worked.

Summary: Overtime pay is calculated at time an a half of regular pay. What is time and a half? Time and a half refers to an increased rate of pay typically reserved for hours worked overtime or those that exceed the 40-hour work week. FLSA overtime pay is calculated: Hourly pay rate x 1.5 x overtime hours worked. For example, an employee hourly pay rate is $20 per hour and worked 44 hours in a week:

Step 1: $20 per hour x 40 hours = $800 regular pay

Step 2: $30 overtime pay rate x 4 hours = $120 overtime pay

Step 3: $800 + $120 = $920 total pay for the week.

The federal overtime provisions are contained in the Fair Labor Standards Act (FLSA). Under the FLSA, nonexempt employees must receive overtime pay for hours worked over 40 per workweek. Employees covered by the Fair Labor Standards Act (FLSA) must receive overtime pay for hours worked in excess of 40 in a workweek of at least one and one-half times their regular rates of pay.

Overtime must be paid at a rate of at least one and one-half times the employee’s regular rate of pay for each hour worked in a workweek in excess of the maximum allowable in a given type of employment. Generally, the regular rate includes all payments made by the employer to or on behalf of the employee (except for certain statutory exclusions).

Hourly rate (regular pay rate for an employee paid by the hour)

If more than 40 hours are worked, at least one and one-half times the regular rate for each hour over 40 is due.

Example: An employee paid $8.00 an hour works 44 hours in a workweek. The employee is entitled to at least one and one-half times $8.00, or $12.00, for each hour over 40. Pay for the week would be $320 for the first 40 hours, plus $48.00 for the four hours of overtime – a total of $368.00.

Piece rate

The regular rate of pay for an employee paid on a piecework basis is obtained by dividing the total weekly earnings by the total number of hours worked in that week. The employee is entitled to an additional one-half times this regular rate for each hour over 40, plus the full piecework earnings.

Example: An employee paid on a piecework basis works 45 hours in a week and earns $405. The regular rate of pay for that week is $405 divided by 45, or $9.00 an hour. In addition to the straight-time pay, the employee is also entitled to $4.50 (half the regular rate) for each hour over 40 – an additional $22.50 for the 5 overtime hours – for a total of $427.50.

Another way to compensate pieceworkers for overtime, if agreed to before the work is performed, is to pay one and one-half times the piece rate for each piece produced during the overtime hours. The piece rate must be the one actually paid during nonovertime hours and must be enough to yield at least the minimum wage per hour.

Salary

The regular rate for an employee paid a salary for a regular or specified number of hours a week is obtained by dividing the salary by the number of hours for which the salary is intended to compensate. The employee is entitled to an additional one-half times this regular rate for each hour over 40, plus the salary.

If, under the employment agreement, a salary sufficient to meet the minimum wage requirement in every workweek is paid as straight time for whatever number of hours are worked in a workweek, the regular rate is obtained by dividing the salary by the number of hours worked each week.

To illustrate, suppose an employee’s hours of work vary each week and the agreement with the employer is that the employee will be paid $480 a week for whatever number of hours of work are required. Under this agreement, the regular rate will vary in overtime weeks. If the employee works 50 hours, the regular rate is $9.60 ($480 divided by 50 hours).

In addition to the salary, half the regular rate, or $4.80, is due for each of the 10 overtime hours, for a total of $528 for the week. If the employee works 60 hours, the regular rate is $8.00 ($480 divided by 60 hours). In that case, an additional $4.00 is due for each of the 20 overtime hours for a total of $560 for the week.

In no case may the regular rate be less than the minimum wage required by the FLSA.

If a salary is paid on other than a weekly basis, the weekly pay must be determined in order to compute the regular rate and overtime pay. If the salary is for a half month, it must be multiplied by 24 and the product divided by 52 weeks to get the weekly equivalent. A monthly salary should be multiplied by 12 and the product divided by 52.

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Fair Labor Standard Act Overtime Calculation

Hourly rate (regular pay rate for an employee paid by the hour)

Piece rate

Salary

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