1. FLSA and Overtime Calculations
Terry Meggitt, CPP
Instructor
FLSA and Ovetime Calculations

2. FLSA and Overtime Calculations
1. Nonexempt Employees. 2. Work Week 3. Hours Worked 4. Regular Rate of Pay 5. Examples
FLSA and Ovetime Calculations

3. Federal Wage-Hour Law (FLSA)
Mandates equal pay for equal work.
Places restrictions of what type of job duties children can do and the hours they can work.
Sets minimum wage and minimum amount to be paid for overtime when an employee works more then 40 hours;
Requires recordkeeping by employers.
Wages must be paid by your paydate.
FLSA and Ovetime Calculations

4. State Wage-Hour Law (FLSA)
Lunch breaks and coffee breaks.
Regulates how often employees must be paid.
Regulates when terminated employees must be paid.
Restrict the hours children over 16 may work.
FLSA and Ovetime Calculations

5. States Deceased Employees wages Direct Deposit or Paycards
Pay Frequency Requirements
Pay Statements Provided to Employees
Unclaimed Paychecks
FLSA and Ovetime Calculations

6. NonExempt
NonExempt
Must be paid at least the minimum wage for all hours worked and must be paid an overtime premium for all hours worked over 40 in a workweek.
Hourly: Paid by the hour and receives additional premium pay for hours worked over 40 in a workweek.
Salaried: Receives a salary for hours worked up to 40 per workweek. Overtime is still due when working more than 40 hours in a workweek.
FLSA and Ovetime Calculations

7. Regular Rate of Pay Workweek
Each employer is responsible for establishing its workweek and they may be different for facilities or groups of employees as long as it remains fixed once it has been established.
A regular recurring period of 7 consecutive 24 hour periods (168 consecutive hours)
Exemption for hospital and nursing homes: 14 consecutive 24 hour periods (336 consecutive hours)
8/80 rule: overtime is based on either hours over 8 in a day or 80 in a 14 day period which ever is greater.
FLSA and Ovetime Calculations

8. Regular Rate of Pay Hours Worked
FLSA only requires an overtime premium to be paid for hours physically worked over 40 in a workweek.
Paid time off, holidays, sick pay, jury duty pay etc… does not have to be included when determining if the 40 hour threshold has been met.
Hours not worked can not be used to offset any overtime obligation.
FLSA does not set a maximum hour limitation in a workweek but state laws may.
FLSA and Ovetime Calculations

9. Regular Rate of Pay
Regular Rate of Pay is the rate you use in calculating overtime premium pay, the ½ time piece.
To get the Regular Rate of Pay you must add up all dollars based on worked time, then divide all worked hours into the dollars. Remember if an employee has not worked more then 40 this calculation is not needed.
Worked Dollars divided by Worked Hours = Regular Rate of Pay
FLSA and Ovetime Calculations

10. Regular Rate of Pay What is included in the regular rate?
Base pay – employee base rate of pay without adding any additional pays like lead pay, shift, etc…
Nondiscretionary bonuses – contractual or agreed upon payment related to performance (production, efficiency, attendance, quality etc…).
On-call pay – the greater the restrictions the more likely it should be compensable work time.
Payments in a form other than cash – the fair market value of the goods or services.
Shift differentials – additional amount for working shifts
Retroactive pay and Supplemental disability payments
FLSA and Ovetime Calculations

11. Regular Rate of Pay What is not included in the regular rate?
Benefit plan contributions – Employer contributions to profit sharing, thrift or saving (including 401k, 403b etc…)
Discretionary bonuses – discretion whether to pay and to be able to determine the amount.
Gifts – at Christmas or other special occasions,
Paid time off – vacation, pto, holiday, sick etc…
Reimbursed expense – business related expenses
FLSA and Ovetime Calculations

12. Regular Rate of Pay What is not included in the regular rate? Cont
Overtime compensation – other than required (more than 8 hours in a day or hours before 40)
Premium pay for extra days worked – Saturday, Sunday or holiday but not for working more than 40 hours in workweek.
Premium pay under a union contract for extra hours – established by a valid collective bargaining agreement.
These additional pays can be used to offset any overtime pay due the employee for the same workweek.
FLSA and Ovetime Calculations

13. Calculating Regular Rate of Pay: All pay based on worked hours
All hours worked
FLSA and Ovetime Calculations

14. Regular Rate of Pay Calculating Regular Rate of Pay: Example 1
An employee works 50 hours at $11 per hour:
50 x 11 = $ x 11 = $440.00
10 x 11 x .5 = $ x 11 x 1.5 = $165.00
$ $55.00 = $ $ $ = $605.00
Note: Because there is no additional amounts (shift pay, bonus, etc…) either way you calculate, their gross is the same.
FLSA and Ovetime Calculations

15. Regular Rate of Pay Calculating Regular Rate of Pay: Example 2
An employee works 50 hours at $11 per hour and receives 20 hours of shift pay at $2.50 per hour:
50 x $11 = $ Hours x Rate
20 x $2.50 = $ Shift Pay
$ All straight time pay
$600 / 50 = $ Regular Rate of Pay for Overtime
10 x $12 x .5 = $60.00 Overtime Premium
$ $ $60.00 = $ Gross Pay
FLSA and Ovetime Calculations

16. Regular Rate of Pay Calculating Regular Rate of Pay: Example 3
An employee works 50 hours at $11 per hour and receives 20 hours of shift pay at $2.50 per hour and receives a $100 bonus for work on Saturday:
50 x $11 = $ Hours x Rate
20 x $2.50 = $ Shift Pay
$ Bonus
$ All straight time pay
$700 / 50 = $ Regular Rate of Pay for overtime
10 x $14 x .5 = $70.00 Overtime Premium
$ $ $ $70.00 = $ Gross Pay
FLSA and Ovetime Calculations

17. Regular Rate of Pay Calculating Regular Rate of Pay: Example 4
An employee works 34 hours and has 16 hours of vacation at $11 per hour:
50 x $11 = $550.00
Note: Because there is only 34 hours worked no overtime is due.
But your company may have a policy that states this employee is to receive OT pay because of total hours are over 40. That’s ok but you would not have to do the FLSA calculation.
FLSA and Ovetime Calculations

18. Regular Rate of Pay Calculating Regular Rate of Pay: Example 5
An employee works 50 hours at $11 per hour and receives a $100 discretionary bonus:
50 x $11 = $550.00
10 x $11 x .5 = $55.00
$100 discretionary bonus
$ $ $100 = $705.00
Note: Because the bonus is at the employer discretion this bonus does not have to be included in the calculation of the regular rate of pay.
FLSA and Ovetime Calculations

19. Regular Rate of Pay Calculating Regular Rate of Pay: Example 6
An employee works 50 hours at $11 per hour (5 of these hours are paid at double time) and receives 20 hours of shift pay at $2.50 per hour:
50 x $11 = $ x $11 = $550.00
20 x $2.50 = $ x $2.50 = $50.00
$600 / 50 = $ x $11 = $55.00
10 x $12 x .5 = $ x $11 x .5 = $27.50
$ $ $60.00 = $ Gross $682.50
Because the double time pays more than the employer is required too no additional calculation is needed.
FLSA and Ovetime Calculations

20. Regular Rate of Pay Special Problems in Regular Rate Determinations
Employees working at more than one rate: Example 7
22 hours at $11 per hour = $242.00
20 hours at $12.10 per hour = $242.00
Total $484.00
$ / 42 hours = $
$11.52 x 2 x .5 = $11.52
Total Pay $ = $495.52
FLSA and Ovetime Calculations

21. Regular Rate of Pay Special Problems in Regular Rate Determinations
Salaried nonexempt employees: Example 8
A nonexempt employee is paid an annual salary of $27,300 for working 35 hours per week.
35 x 52 = 1820 $27,300 / 1820 = $15 per hour
This employee must be paid $15 per hour worked between 36 – 40 and at least $22.50 per hour (1.5 x 15) for all hours over 40.
FLSA and Ovetime Calculations

22. Regular Rate of Pay Special Problems in Regular Rate Determinations
Salaried nonexempt employees: Example 9
A nonexempt employee is paid an annual salary of $27,300 for working hours per week.
37.50 x 52 = 1950 $27,300 / 1950 = $14 per hour
This employee must be paid $14 per hour worked between – 40 and at least $21.00 per hour (1.5 x $14) for all hours over 40.
FLSA and Ovetime Calculations

23. Regular Rate of Pay Special Problems in Regular Rate Determinations
Salaried nonexempt employees working a fluctuating workweek: Example 10
Employee hours vary from workweek to workweek so employer enter into an agreement with employees to pay them a fixed salary even if they work only 35 hours. But if they go over 40 they must be paid ½ time for hours over 40.
Fixed salary = $400
Workweek one worked 45 hours Gross = $422.23
$400 / 45 = $ x $8.89 x .5 = $22.23
Workweek two worked 50 hours Gross = $440.00
$400 / 50 = $ x $8.00 x .5 = $40.00
FLSA and Ovetime Calculations

24. Regular Rate of Pay Special Problems in Regular Rate Determinations
Salaried nonexempt employees receiving additional pay late: Example 11
When payroll receives additional pay late that needs to be addition to a prior pay period, you do not have to recal the whole check because to know these pieces of the puzzle:
1. Total hours worked
2. Total OT hours
3. Additional amount
Divide 1 into 3 * result by 2 * .5 and pay result + 3 (see examples)
FLSA and Ovetime Calculations

25. Regular Rate of Pay Daylight saving time issues:
Special Problems in Regular Rate Determinations
Daylight saving time issues:
Second Sunday in March clocks are moved forward by one hour. Employer does not have to pay this hour, but if they do they can not use this pay to offset any overtime due.
First Sunday in November clocks are set back by one hour. Employer must pay this hour and count this hour for overtime.
FLSA and Ovetime Calculations

26. Questions
FLSA and Ovetime Calculations

27. terry@payrolluniversity.net www.apanorthstar.org
Thank You
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FLSA and Ovetime Calculations