How do I compute my employee’s average regular rate for the purpose of the FFCRA?
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As an employer, you are required to pay your employee based on his or her average regular rate for each hour of paid sick leave or expanded family and medical leave taken. The average regular rate must be computed over all full workweeks during the six-month period ending on the first day that paid sick leave or expanded family and medical leave is taken.
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If during the past six months, you paid your employee exclusively through a fixed hourly wage or a salary equivalent, the average regular rate would simply equal the hourly wage or the hourly-equivalent of their salary. But if your employee were paid through a different compensation arrangement (such as piece rate) or received other types of payments (such as commissions or tips), his or her regular rate may fluctuate week to week, and you may compute the average regular rate using these steps:
- First, you must compute the employee’s non-excludable remuneration for each full workweek during the six-month period. Notably, commissions and piece-rate pay counts towards this amount. See 29 CFR part 778. Tips, however, count only to the extent that you apply them towards minimum wage obligations (i.e., you take a tip credit). See 29 CFR part 531.60. Overtime premiums do not count towards your employee’s regular rate. Please note that, unlike when computing average hours, you should not count payments your employee received for taking leave as part of the regular rate.
- Second, you must compute the number of hours the employee actually worked for each full workweek during the six-month period. Please note that, unlike when computing average hours, you do not count hours when the employee took leave.
- Third, you then divide the sum of all non-excludable remuneration received over the six-month period by the sum of all countable hours worked in that same time period. The result is the average regular rate.
Consider the examples below involving an employee who takes leave on April 13, 2020. The six-month period would run from Monday, October 14, 2019, to Monday, April 13, 2020. Assuming you use a Monday to Sunday workweek, there are twenty-six full workweeks in that period, which includes 182 calendar days. Please note this is one day fewer than the 183 calendar days falling between October 14, 2019, and April 13, 2020, because the date the leave is taken, April 13, 2020, is a Monday that does not fall in any of the twenty-six full workweeks.
| Week | Non-Excludable Remuneration | Hours Worked |
|---|---|---|
| 1 | $1,100 | 50 |
| 2 | $1,300 | 60 |
| 3 | $700 | 35 |
| 4 | $700 | 35 |
| 5 | $1,100 | 50 |
| 6 | $700 | 50 |
| 7 | $600 | 30 |
| 8 | $700 | 50 |
| 9 | $1,100 | 50 |
| 10 | $700 | 50 |
| 11 | $700 | 35 |
| 12 | $1,300 | 60 |
| 13 | $700 | 35 |
| 14 | $1,300 | 60 |
| 15 | $1,100 | 50 |
| 16 | $1,300 | 60 |
| 17 | $1,100 | 50 |
| 18 | $600 | 30 |
| 19 | $700 | 35 |
| 20 | $700 | 50 |
| 21 | $1,100 | 50 |
| 22 | $700 | 30 |
| 23 | $700 | 30 |
| 24 | $700 | 30 |
| 25 | $800 | 35 |
| 26 | $800 | 50 |
| TOTAL | $23,000 | 1,150 |
In total, the employee worked 1,150 hours and received $23,000 in non-excludable remuneration. The average regular rate is therefore $20.00 ($23,000 divided by 1,150 hours).