Federal overtime is a weekly test, at a rate set off the regular rate. Get the workweek boundary and the 1.5 multiplier right and most of this unit falls out.
The overtime formula
Overtime rate = regular rate x 1.5, owed on hours over 40 in a workweek. Total pay = (40 x regular rate) + (overtime hours x overtime rate).
Worked example at $18.00 per hour for 46 hours:
- Straight time: 40 x $18.00 = $720.00
- Overtime rate: $18.00 x 1.5 = $27.00
- Overtime pay: 6 x $27.00 = $162.00
- Total gross: 720 + 162 = $882.00
The overtime premium portion is the full time-and-a-half on those hours, not just the half-time increment. At $22.00 per hour for 48 hours: 8 hours over 40, rate $22.00 x 1.5 = $33.00, premium pay 8 x $33.00 = $264.00; total for the week is $880.00 + $264.00 = $1,144.00. Counting only $11.00 x 8 = $88 is the keyed trap.
No daily overtime
The FLSA specifies no daily overtime. An employee working 11, 11, 6, 6 and 6 hours has worked exactly 40 hours and is owed no federal overtime, however lopsided the days. There is no federal eight-hour-day rule.
Minimum wage and tipped employees
- Federal minimum wage: $7.25 per hour, effective July 24, 2009.
- Minimum direct cash wage for a tipped employee: $2.13 per hour.
- The maximum tip credit is the difference, $7.25 - $2.13 = $5.12 — do not report that as the cash wage.
Recordkeeping
Under DOL Fact Sheet #21: payroll records three years; time cards and other records on which wage computations are based, two years (piece work tickets, wage rate tables, work schedules). Reversing the two is the trap.
Fixing a misclassification
Coordinators paid $690 per week with no management, no discretion on matters of significance and no advanced knowledge fail every duties test. Reclassify them as nonexempt, begin tracking hours, and calculate overtime owed at 1.5 times the regular rate for hours over 40. Raising the salary changes nothing — duties still fail.