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What Should Be Included in an Employee’s Regular Rate of Pay When Calculating Overtime Wages Owed?

The regular rate of pay is the starting point in calculating an employee’s proper overtime rate of pay. No matter how an employee is paid- whether by the hour, by piece, on commission, or on a salary- the employee’s compensation must be converted to an equivalent hourly rate from which the overtime rate of pay can be calculated.  This is because overtime pay is calculated by the hour at time-and-a-half the hourly rate.

The regular rate for overtime pay includes all remuneration paid to the employee. Thus, for example, if an employee receives a salary and then also gets a bonus in a given week, the bonus must be added to the salary when calculating the employee’s regular rate for the purpose of overtime pay.

While an employee’s regular rate does include all remuneration, there are some specific items that are excluded from calculating the regular rate of pay for the purpose of overtime pay. For example, gifts (i.e gifts at Christmas time) are excluded.  Also excluded are contributions irrevocably made by an employer to a trustee or third party pursuant to a bona fide plan providing old-age, retirement, life, accident, or health insurance or similar benefits to employees. Also excluded are payments made by the employer to a profit-sharing plan, a trust, a thrift or savings plan. For this exclusion to be valid, the plans must meet the Department of Labor’s specific requirements. There are other items that may be excluded from the regular rate of pay for the purpose of overtime pay.

As the foregoing demonstrates, what is included in the regular rate of pay for the purpose on unpaid overtime pay depends on the specific facts. If you have questions regarding your right to overtime pay or minimum wage you should contact an overtime pay and minimum wage lawyer at LaBar & Adams, P.A. at 407-835-8968 or fill out the online form located on our website..

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