Regular Rate of Pay Calculator
Calculate FLSA-compliant overtime rates including bonuses and commissions.
Calculation Summary
Understanding the Regular Rate of Pay Calculation
In payroll and employment law, specifically under the Fair Labor Standards Act (FLSA), the "Regular Rate of Pay" is not always simply the employee's base hourly wage. It is a weighted average of all remuneration paid to the employee for work performed during the workweek.
Why is this calculation important?
Many employers make the mistake of calculating overtime (1.5x) based solely on the base hourly rate. However, if an employee earns commissions or non-discretionary bonuses (bonuses promised for reaching certain production or quality goals), these must be factored into the regular rate of pay before calculating overtime premiums.
The Regular Rate Formula
Regular Rate of Pay Calculation Example
Let's look at a realistic scenario for a production worker:
- Base Hourly Rate: $20.00/hour
- Hours Worked: 50 hours
- Production Bonus: $100.00
Step 1: Calculate Straight-Time Earnings
(50 hours × $20.00) + $100.00 Bonus = $1,100.00 total earnings.
Step 2: Determine Regular Rate
$1,100.00 / 50 hours = $22.00 per hour. (Note: This is higher than the $20 base rate because of the bonus).
Step 3: Calculate Overtime Premium
The employee has already been paid the straight-time rate for all 50 hours. Now they need the "half-time" premium for the 10 overtime hours.
$22.00 × 0.5 = $11.00 (Half-time premium)
$11.00 × 10 hours = $110.00 (Total Overtime Premium).
Step 4: Total Gross Pay
$1,100.00 (Straight-time) + $110.00 (OT Premium) = $1,210.00.
Frequently Asked Questions
What should be excluded from the regular rate?
Under the FLSA, items such as discretionary gifts, reimbursement for business expenses, paid time off (vacation/sick), and certain benefit plan contributions are typically excluded.
Is a shift differential included?
Yes. If an employee receives an extra $2/hour for working the night shift, that differential must be included in the regular rate calculation for overtime purposes.