C. Regular Rate of Pay for Hourly Employees

If a worker gets an hourly rate and nothing more, the regular rate will be the hourly rate. If productivity bonuses are given, they must be included in the regular rate as shown below. If a worker gets a shift differential, i.e., additional pay for working an unusual shift, the hourly rate, including the shift differential, is still the regular rate. The differential may not be counted toward overtime pay that might be due - the regular rate is simply higher because the hourly rate itself is higher. As an example, if the normal hourly rate is $12.50 per hour, and an employee receives a shift differential of $1.50 per hour, the regular rate of pay for that employee would be $14.00 per hour. 29 C.F.R. 778.110 covers the issue of the regular rate for employees who are paid a simple hourly rate. The regulation also gives an example of how to include a bonus in the regular rate. Here is the regulation in its entirety:

29 C.F.R. 779.110 - Hourly rate employee.

(a) Earnings at hourly rate exclusively. If the employee is employed solely on the basis of a single hourly rate, the hourly rate is the "regular rate." For overtime hours of work the employee must be paid, in addition to the straight time hourly earnings, a sum determined by multiplying one-half the hourly rate by the number of hours worked in excess of 40 in the week. Thus a $12 hourly rate will bring, for an employee who works 46 hours, a total weekly wage of $588 (46 hours at $12 plus 6 at $6). In other words, the employee is entitled to be paid an amount equal to $12 an hour for 40 hours and $18 an hour for the 6 hours of overtime, or a total of $588.

(b) Hourly rate and bonus. If the employee receives, in addition to the earnings computed at the $12 hourly rate, a production bonus of $46 for the week, the regular hourly rate of pay is $13 an hour (46 hours at $12 yields $552; the addition of the $46 bonus makes a total of $598; this total divided by 46 hours yields a regular rate of $13). The employee is then entitled to be paid a total wage of $637 for 46 hours (46 hours at $13 plus 6 hours at $6.50, or 40 hours at $13 plus 6 hours at $19.50).

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