Wednesday, December 4, 2019

Do you know how to calculate the “regular rate of pay” for your employees? (hint: probably not)

The Fair Labor Standards Act requires that employers pay their non-exempt employees one and one-half times the “regular rate of pay” for any hours worked in excess of 40 in any work week. For an employee paid a straight hourly rate, this calculation is simple and straight forward. A $10 per hour employee earns an overtime rate of $15 per overtime hour. Easy peasy.

Often times, however, employees aren’t just paid a straight hourly rate. Uh oh.

In fact, non-exempt employees are paid in lots of different ways: salary, piece rates, commissions, bonuses, and shift-differentials, for example. Each has a significant impact on the calculation of an employee’s “regular rate,” and therefore the overtime rate. And the risks of a miscalculation are huge, including class actions lawsuits and large attorney-fee awards.

Thankfully, I have your wage-and-hour back. Jump over to Gusto to read all about how to calculate the regular and overtime rate for each of these various alternate compensation methods. I even did some math for you.

* Photo by Sharon McCutcheon on Unsplash