FLSA Regular Rate & Overtime Calculator
Calculate the correct overtime rate when bonuses, commissions, or shift differentials are involved.
Understanding the FLSA Regular Rate of Pay
Under the Fair Labor Standards Act (FLSA), overtime pay is calculated based on the Regular Rate of Pay, not just the employee's base hourly wage. This distinction is critical for employers to avoid wage theft lawsuits and for employees to ensure they are compensated correctly.
The Regular Rate is a weighted average that must include the base hourly rate plus other forms of compensation earned during the workweek, such as non-discretionary bonuses, commissions, and shift differentials.
The Calculation Formula
The standard formula for calculating the Regular Rate is:
Regular Rate = (Total Pay for Workweek) ÷ (Total Hours Worked)
Once the Regular Rate is established, the overtime premium is calculated as 0.5 times the Regular Rate for every hour worked over 40.
What is Included in the Regular Rate?
When calculating the total pay for the numerator of the fraction, you must include:
- Base Wages: Hourly rate multiplied by total hours worked.
- Non-Discretionary Bonuses: Bonuses based on performance, attendance, or production.
- Commissions: Payments based on sales percentages.
- Shift Differentials: Extra pay for working nights or weekends.
- On-Call Pay: Compensation for remaining available to work.
What is Excluded?
The FLSA allows specific exclusions from the Regular Rate calculation, such as:
- Discretionary Bonuses: Unexpected bonuses where the employer retains full discretion over the amount and timing (e.g., a holiday gift).
- Paid Time Off: Vacation, sick leave, or holiday pay for hours not actually worked.
- Expense Reimbursements: Repayment for tools, travel, or materials.
- Premium Pay: Extra pay specifically for working overtime hours (to avoid double-counting).
Example Scenario
Consider an employee named Alex. Alex earns $20.00/hour. In one week, Alex works 50 hours and earns a $100 production bonus.
- Base Wages: 50 hours × $20.00 = $1,000.00
- Total Straight Time Pay: $1,000.00 (Base) + $100.00 (Bonus) = $1,100.00
- Regular Rate: $1,100.00 ÷ 50 hours = $22.00/hour
- Overtime Premium: $22.00 × 0.5 = $11.00 per overtime hour
- Total Overtime Due: 10 OT hours × $11.00 = $110.00
- Total Weekly Pay: $1,100.00 (Straight Time) + $110.00 (OT Premium) = $1,210.00
Note: If the employer had simply paid 1.5x the base rate ($30) for the 10 overtime hours, the total would be $1,000 + $300 + $100 = $1,400? No, usually the error is paying OT on base only ($20 * 1.5 = $30). The math ensures the bonus is factored into the OT rate.