If you work overtime—more than 40 hours in a workweek, under the federal Fair Labor Standards Act (FLSA)—you may be entitled to overtime pay. Not all employees are entitled to overtime. If you fall within an exception to the general overtime rule, you are an exempt employee, not entitled to overtime. For example, certain white-collar employees are exempt.
As long as you are not an exempt employee, you are entitled to overtime pay: time-and-a-half for every extra hour you work in a week. To figure out what you should be getting paid, you’ll need to know how to determine your regular rate of pay. You are entitled to that amount for every hour you work up to 40, then one-and-a-half times that amount for every additional hour you work that week. (Although most states also require overtime after 40 hours in a week, a few—including California—have a daily overtime standard, entitling employees to overtime pay if they work more than eight hours in a day, even if they don’t work more than 40 hours in a week.)
Read on to find out what’s included and what’s left out when calculating your regular rate of pay, and how to determine how much overtime you have earned.
What the Regular Rate of Pay Includes
Your regular rate of pay includes your total remuneration for your employment, with a handful of exceptions (discussed below). Your regular rate must be equal to at least the applicable minimum wage. Your regular rate includes:
- wages or salary
- bonuses based on productivity, efficiency, performance, or attendance
- payments received in the form of goods that are intended to be part of your wages (like room and board), and
- premium payments other than for overtime, such as night shift pay differentials and premiums paid for hazardous, arduous, or dirty work.
Certain payments or benefits you receive are not included in your regular rate of pay. These include:
- premium payments for overtime work or extra pay for work on Saturdays, Sundays, and holidays
- money paid as a gift (like a holiday bonus not based on hours worked or productivity)
- payments for time off, like sick days, vacation, and holidays
- reimbursements from the employer for expenses you paid (for example, if you pay for a train ticket for business travel)
- bonuses that are completely discretionary, and
- amounts your employer spends on your employee benefits, such as health care coverage or life insurance.
This is a partial list of inclusions and exclusions. You can read the statutory exceptions in section 207(e) of the FLSA.
Calculating Your Regular Rate of Pay
To figure out your regular rate of pay, you first need to know how your employer measures the workweek. A workweek is a fixed and regularly recurring period of 168 hours—seven consecutive 24-hour periods. For example, your employer may have a workweek that begins on Monday at 12:01 a.m. and ends at midnight on Sunday. Check your employee handbook to find out your employer’s practice. (It may also appear on your pay stub.)
To calculate your regular rate of pay, add up your total compensation for the workweek. (Don’t include the excluded items listed above, such as discretionary bonuses.) Divide that number by the total hours you worked during the week. The result is your regular rate of pay. You are entitled to one-and-a-half times that amount for overtime work (unless you are an exempt employee). Here are some examples:
- If you are paid by the hour, and you don’t receive any bonuses or other extra payments for the week, your hourly rate is your regular rate. If, for example, you earn $14 an hour and you work 45 hours in a week, your total pay should be $665: 40 hours at $14 ($560) and 5 hours at $21 ($105).
- If you are paid by the hour and receive a bonus, add the bonus to your wages, then divide the total by your total hours worked. For example, if your earnings are as described above and you earn a $90 productivity bonus for the week, your regular rate of pay for the week is $16, and your overtime hours are worth $24 each: Your $90 bonus plus 45 hours at $14 straight time each ($630) adds up to $720. If you divide that by 45 hours, you get a regular rate of pay for that week of $16.
- For salaried employees, the regular rate is calculated by dividing that salary by the number of hours for which the salary is intended to cover, if that time is 40 hours or less. If the salary covers a period longer than the workweek, the workweek equivalent must be computed in order to determine the regular rate of pay. A monthly salary, for instance, is converted to its equivalent weekly wage by multiplying that salary by 12 (months in the year) and dividing that total by 52 (weeks in the year).
The same rules apply if you are paid by the piece or on commission: You must add up your total compensation and divide it by your hours to come up with your regular rate. You are entitled to one-and-a-half times that amount for every overtime hour you work.
Questions For Your Attorney
- I am paid partly by the hour and partly on commission; how do I calculate my hourly rate?
- I got a performance bonus for the quarter; does it all count towards my regular rate in the pay period when I receive it, or should I divide it over the whole quarter it covers?
- What can I do if I think my employer is miscalculating my overtime pay?