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Agenda
Regular Rate of Pay
Factors that contribute to regular rate of pay calculations
Calculating regular rate of pay for overtime and paid sick leave
Regular Rate of Pay Used for calculating:
◦ Overtime payments◦ Paid sick leave benefits (effective July 1, 2015)
Weighted average of an employee’s hourly rate of pay.
Factors use when calculating the regular rate of pay include:◦ Hours worked◦ Workweeks◦ Compensation
Hours Worked Defined All time an employee must be on duty.
Includes time the employee is “suffered or permitted” to work.
If employee voluntarily stays late to complete work, prepare reports, or assist with a customer, that time counts.
Also includes such events as on-call time, mandatory training and business travel.
Exempt employees regularly scheduled for 40+ hours per week only receive credit for 40 hours.
Workweek Defined
Fixed and regularly occurring period of 168 hours or 7 consecutive 24 hour periods.
May begin on any day and should be defined by the employer.
When calculating overtime payments, each workweek stands alone.
Compensation Defined Hourly rate of pay
◦ If exempt, then annualized base salary divided by 2,080
Examples of other forms of compensation that are included in the calculation:◦ Commissions◦ Shift differentials◦ Nondiscretionary bonuses◦ Promotional bonuses◦ Cost of living adjustments◦ Incentives◦ Piecework earnings◦ Payments made in the form of goods or facilities customarily furnished by the employer.
◦ For example: Employer includes lodging for employee, the reasonable cost or the fair value of that lodging must be added to the earnings.
Compensation Excluded Overtime premiums
Payments for periods when no work performed:◦ Holiday pay◦ Vacation or PTO pay◦ Sick pay
Benefits
Expense reimbursements
Premium pay for weekends
Discretionary bonuses
Overtime vs. Paid Sick Leave
Overtime ◦ Regular rate of pay is calculated on a workweek basis.
Paid Sick Leave◦ Regular rate of pay is calculated using the 90 days period preceding the sick
leave taken.
Overtime Example Employee earns a Base Rate of Pay $10/hour and earns commission.
Works 45 hours in a workweek and earns $300 commission
Total Compensation = ($10/hr X 45 hrs) + $300 Commission = $750/ Total Hours Worked 45
Regular Rate of Pay is $16.67/hour
Calculate Overtime Due $16.67 X .5 X 5 hrs OT = $41.68
Total Pay = $450 (45 hours X $10) + $41.68 (OT Due) + $300 (commission) = $491.68
Paid Sick Leave Example Employee earns a Base Rate of Pay $10/hour and earns commission.
Uses 8 hours of paid sick leave.
During preceding 90 days period worked 400 hours and earned $2,500 in commission.
Compensation: (400 hours X $10) + $2,500 = $6,500
Calculation: Total Compensation / Total Hours = $6,500 / 400 = $16.25
Regular Rate of Pay is $16.25
Paid Sick Leave Pay = 8 X $16.25 = $130.00 (vs. $80.00)
Paid Sick Leave Example Exempt Employee earns $52,000 per year ($25/hour) and receives their annual performance bonus of $20,000. They use 8 hours of paid sick leave hours 2 weeks after they receive their bonus.
During preceding 90 days period worked 50 hours per week for a total of 600 hours.
Compensation: (12 weeks X $1,000) + $20,000 = $32,000
Calculation: Total Compensation / Total Hours = $32,000/ 480* = $66.67
Regular Rate of Pay is $66.67
Paid Sick Leave Pay = 8 X $66.67 = $533.36 (vs. $200)
*Only 40 hours per week can be applied for exempt employees
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