Overtime Rate Errors
Under the Fair Labor Standards Act, overtime compensation generally must be paid to covered employees (e.g., employees who are not subject to an exemption from the overtime protections) at a rate of at least 1.5 times their regular rate of pay for hours worked in excess of 40 per workweek.
Our lawyers and staff are trained to recognize overtime calculation errors and are available to discuss whether your overtime pay is being calculated correctly.
Overtime Pay Calculation Details
The amount of overtime due to a worker is based on their regular rate of pay and hours worked in a workweek. Overtime compensation must be calculated by dividing the total pay (except for certain statutory exclusions) in the workweek by the hours worked to determine the regular rate. What compensation has to be included in the regular rate can be complicated and our team is here to help. For example, payments for certain gifts, leave, reasonable business expense reimbursements, discretionary bonuses, profit sharing, employer contributions to benefits plans, premium payments for non-FLSA overtime, and stock options are likely excludable compensation. However, generally, all compensation for hours worked, services rendered, or performance must be included in the regular rate. Whether a particular payment may be excluded from the regular rate requires a review of the applicable statutes to see if it meets the requirements for exclusions.
Examples of Potential Overtime Pay Calculation Errors
Paying straight time (the employee’s regular rate of pay) for overtime worked, rather than 1.5 times the regular rate of pay. We commonly see this problem n the home healthcare industry and for field service technicians.
Failing to include or commission earnings when calculating overtime rate of pay. This is common in sales jobs.
Failing to include non-discretionary bonuses (such as production-based bonuses) when calculating the regular rate of pay used to calculate overtime pay.
Paying on a day rate only, with no additional half-time overtime premium for hours worked over 40 in a workweek. This is especially prevalent in the oil and gas industry and healthcare industry.
Paying workers significant sign-on bonuses and/or restricted stock units but not including the value of that compensation when calculating the overtime rate of pay.
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