The Fair Labor Standards Act (FLSA) requires covered employers to pay nonexempt employees overtime pay for all hours worked over 40 in a workweek. A workweek is 7 consecutive 24-hour periods (168 total hours), and can differ from the pay period.
If employees have multiple pay rates in a single pay period, you need to consider how many hours were worked at each rate to calculate the overtime rate. How this is calculated can depend on the pay schedule, and must include supplemental pay such as bonuses and commissions.
What we'll cover
- Weekly Pay Schedules
- Non-Weekly (Bi-Weekly, Semi-Monthly, & Monthly) Pay Schedules:
- Bonuses, commissions, and overtime calculations
- Government resources
Weekly Pay Schedules
Overtime is calculated using the regular pay rate based on the weighted average rate of the different pay rates paid in the weekly period. More information on this calculation is available at the Department of Labor.
Example of Calculating Weighted Overtime for a Weekly Pay Frequency
A nursing assistant, Martin, is paid $11 per hour, on a 40-hour weekly frequency. But one week, Martin not only works his regular schedule (40 hours at $11 per hour), he fills in as a receptionist for another 16 hours, at a rate of $8 per hour. So if overtime is calculated on the regular rate, but there are two different regular rates in the pay period, we use a weighted average, as demonstrated below:
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Step 1: Calculate total straight-time compensation |
(40 hours x $11/hour) + (16 hours x $8/hour) =$568 |
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Step 2: Calculate regular rate of pay |
$568 (straight-time) ÷ 56 hours worked =$10.14 |
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Step 3: Calculate the overtime premium |
$10.14 (regular rate) x ½ =$5.07 |
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Step 4: Calculate the overtime compensation |
$5.07(overtime premium) X 16 (overtime hours)=$81.12 |
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Step 5: Add the straight time and overtime together to get total compensation |
$568 (straight-time) +$81.12 (overtime)=$649.12 |
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Total gross compensation: $649.12 |
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Non-Weekly (Bi-Weekly, Semi-Monthly, & Monthly) Pay Schedules:
Overtime will be calculated using the highest pay rate for the hours worked within the pay period. Paying the highest overtime rate ensures your company is in compliance with FLSA requirements. OnPay is not able to calculate weighted overtime for non-weekly pay frequencies. If you prefer to calculate the weighted overtime rate outside of OnPay, a custom field can then be used to enter the overtime premium in OnPay.
Example of Calculating Overtime for a Non-Weekly Pay Frequency
We'll use the same scenario as before, where our nursing assistant, Martin, not only works his regular schedule of 40 hours, at $11 per hour, but he also fills in as a receptionist for another 16 hours, at a rate of $8 per hour. But this time, Martin is paid on an 80-hour, Bi-weekly frequency.
Since overtime is based on hours worked per within a week, the most compliant way to calculate overtime is to use the higher of the two regular rates, as demonstrated below:
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Step 1: Calculate total straight-time compensation |
(80 hours x $11/hour) + (16 hours x $8/hour) =$1008 |
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Step 2: Calculate the overtime premium for the higher pay rate |
$11 (higher pay rate) x ½ =$5.50 |
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Step 3: Calculate the overtime compensation |
$5.50 (overtime premium of higher rate) X 16 hours= $88 |
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Step 4: Add the straight-time and overtime together to get total compensation |
$1008 (straight-time) + $88 (overtime) = $1096 |
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Total gross compensation: $1096.00 |
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Bonuses, commissions, and overtime calculations
Because commissions and bonuses cannot be attributed to a single pay period, and can be discretionary, they are not factored into overtime calculations by OnPay.
We've got more information on running payroll, special pay runs, and paying bonuses.
Government resources
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