In calculating overtime pay, the most important things to keep in mind are:
Overtime pay depends upon the employee's "regular rate of pay" for the workweek, which can vary from week to week, depending upon exactly how the employee is paid.
The regular rate of pay includes all components of the pay agreement, except for very narrowly-defined premium pay outlined in Section 207(e) of the FLSA.
For all but straight hourly pay or salaries for non-varying workweeks, the general method for calculating overtime is to divide total pay by total hours worked for the workweek, then pay one-half of the resulting regular rate for each overtime hour worked.
Hourly: pay time and a half over 40 hours.
Hourly plus bonus and/or commission: regular rate = (total hours times hourly rate) plus the workweek equivalent of the bonus and/or commission, divided by the total hours in the workweek; then pay half of that regular rate for each overtime hour.
Salary: regular rate = salary divided by the number of hours the salary is intended to compensate.
If the regular hours are less than 40: add regular rate for each hour up to 40, then pay time and a half for hours over 40.
If the regular hours = 40: pay time and a half for hours over 40.
If the regular hours are more than 40: pay hours over 40 at half-time up to the regular schedule, then time and a half past that.
If the hours are irregular: regular rate = salary divided by total hours, then pay half-time for all hours over 40.
Other pay methods: regular rate = total pay divided by total hours, then pay half the regular rate for each overtime hour.
Employers may also receive help on these issues by calling the legal staff at the toll-free number for the TWC Employer Commissioner's office: 1-800-832-9394. Finally, the website for the U.S. Department of Labor offers the full text of the FLSA and the accompanying regulations at https://www.dol.gov/agencies/whd/laws-and-regulations.
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