How to calculate overtime rate per hour?
Overtime pay is an amount based on an employee’s normal rate of pay. This is the pay, or amount, that an employee typically earns for the labor performed. Normal rate of pay can be calculated in a few different ways, including hourly pay, piecework earnings, salary, and commissions. However the pay is calculated, the normal rate of pay cannot be below the relevant minimum wage.
Usually, the normal rate of pay is calculated using a number of hours that does not go over the legal max. In most circumstances, the legal max is eight hours each day of work, or forty hours each week. The maximum may be impacted by how many days an employee labors in a single week. First, it is crucial to figure out what the legal maximum is. Under the Industrial Welfare Commission Wage Orders, there is an alternative way of scheduling and calculating overtime pay. This is based on a work schedule consisting of 4 ten-hour days or 3 twelve-hour days. In this case, the normal rate of pay is not affected. It would still be calculated according to 40 hours per week.
The regular rate of pay should be referred to if the hours are below the law’s max regular hours. This means that if an individual works 32-38 hours every week, and there is an average week of thirty-five hours, then thirty-five hours is used to figure out the normal rate of pay. That said, when a workweek is fewer than forty hours, California law does not mandate overtime pay unless the worker labored more than 8 hours in a day or over forty hours in a week. This means that if an employee works for a company that has a thirty-five-hour workweek, the employer does not have to pay overtime unless more than eight hours a day are worked, or more than 40 hours per week. If an individual at this company works more than thirty-five hours but less than 40, he or she may be paid for the supplementary hours at the normal rate of pay.
There are a few methods used to formulate the normal rate of pay, including the following:
For an employee who is compensated on an hourly basis the regular rate of pay is this amount plus shift differences and the per-hour worth of any non-hourly pay.
If an employee earns a salary, then the normal rate of pay is calculated as follows:
- Monthly pay multiplied by twelve (months) to get the yearly salary.
- Annual salary divided by fifty-two (weeks) to get the per-week salary.
- The weekly salary divided by the regular hours (40) to get the normal hourly rate.
If an employee is paid by commission, then one of the below methods can be utilized to figure out the normal rate of pay.
- The commission rate counts as the normal rate. The employee is paid 1.5 this rate for labor during the first 4 overtime hours in a day and twice the rate for all hours worked over twelve in a day.
- Total earnings for the week divided by all hours worked during the week. Overtime earnings and overtime hours should be included. For each hour of overtime worked, an employee is granted an extra one-half the regular rate. The full rate is granted for hours that need double time.
It is acceptable to use a group rate for piece workers to calculate the normal rate of pay. In this situation, the complete number of pieces the group produced is divided by the amount of individuals in the group. Each person is then paid as determined. The normal rate for each worker is calculated by dividing the pay by the amount of hours worked. The normal rate, however, cannot go below the minimum wage.
If a single employer pays an employee two or more rates during a workweek, then the normal rate may be called the “weighted average.” This is calculated by dividing the total week’s earnings (including overtime) by the sum hours labored during the week (including overtime).
Example: Employee A works thirty-two hours at $11.00 an hour and ten hours at $9.00 an hour during the same workweek. The weighted average, or regular rate of pay, comes out to $10.52. This is because Employee A earns a total of $442 for the workweek. Divided by the forty-two hours worked results in the regular rate for that week.
Does an Employer Have to Pay for Unauthorized Overtime?
Under California law, employers are required to cover overtime regardless of whether it is approved or not. It must be paid at the rate of 1.5 times the employee’s normal rate of pay for every hour worked over the first 8 and extending to and including twelve hours in a day. In addition, this applies to the first 8 hours of labor on the 7th day in a row of work, as well as twice the employee’s normal rate of pay for every hour worked that exceeds 12 in a day.
However, an employee is allowed to punish an employee if they break the employer’s policy about working overtimes without authorization. Still, California’s wage and hour laws mean that the employee must be paid for whatever hours that they worked. Under California law, an employee may not prevent an employer from learning about unauthorized overtime and then return later to reclaim that time. An employer does, however, have the responsibility to keep time records. He or she needs to pay for labor that has been performed for their benefit.