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 consists of seven consecutive 24-hour periods that equal 168 total hours and can differ from the pay period.
When an employee has multiple pay rates in a pay period, the calculation of overtime can become more difficult. OnPay calculates overtime based on the pay schedule frequency, please see below for details.
Weekly Pay Schedules: Overtime will be calculated using a regular rate of pay based on the weighted average rate of the different pay rates paid in the weekly period. For more information on this calculation visit the Department of Labor here.
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 Weighted Overtime for a Weekly Pay Frequency
An employee works as a nurses’ aide for 40 hours at $11 per hour. The employee fills in for 16 hours as a receptionist and is paid $8 per hour. She is paid on a 40-hour weekly frequency.
Overtime may be computed on the regular rate of pay, determined by the weighted average of the two rates. For example, if the employee worked 40 hours at $11 and 16 hours at $8, the following is the regular rate calculation:
Step 1: Calculate total straight-time compensation |
(40 hours x $11/hour) + (16 hours x $8/hour) =$568 |
Step 2: Calculate regular rate of pay |
$568 (straight-time) ÷ 56 hours worked =$10.14 |
Step 3: Calculate the overtime premium |
$10.14 (regular rate) x ½ =$5.07 |
Step 4: Calculate the overtime compensation |
$5.07(overtime premium) X 16 (overtime hours)=$81.12 |
Step 5: Add the straight time and overtime together to get total compensation |
$568 (straight-time) +$81.12 (overtime)=$649.12 |
Total gross compensation: $649.12 |
Example of Calculating Overtime for a Non-Weekly Pay Frequency
An employee works as a nurses’ aide for 80 hours at $11 per hour. The employee also fills in as a receptionist for 16 hours and is paid $8 per hour. She is paid on an 80-hour Bi-weekly frequency.
Since OnPay does not separate hours for each week on a non-weekly frequency, the most compliant way to calculate overtime is to use the higher of the two overtime rates. The following calculation is for the highest overtime rate:
Step 1: Calculate total straight-time compensation |
(80 hours x $11/hour) + (16 hours x $8/hour) =$1008 |
Step 2: Calculate the overtime premium for the higher pay rate |
$11 (higher pay rate) x ½ =$5.50 |
Step 3: Calculate the overtime compensation |
$5.50 (overtime premium of higher rate) X 16 hours= $88 |
Step 4: Add the straight-time and overtime together to get total compensation |
$1008 (straight-time) + $88 (overtime) = $1096 |
Total gross compensation: $1096.00 |