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Case #1. Not paying employees overtime when their average weekly hours
worked over a two-week period didn't exceed 40.
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30 hours times $15 equals $450, plus 20 hours times $10 equals $200, for
a total of $650. $650 divided by total hours worked (50) equals $13 per
hour, weighted average rate.
Once you have that rate, calculating the overtime is a simple matter of
multiplying the rate by 1.5: $13 per hour times 1.5 equals $19.50 per hour.
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Elements of a Wage
The calculation of an employee's hourly wage for purposes of overtime rate
calculation can include earnings from piece-rate pay, commissions, salary, "or
some other basis." In other words, all earnings are thrown into the mix. So,
too, are noncash payments "made in the form of goods or facilities based on
the reasonable cost to the employer or fair value of such goods or facilities.
Payments excluded from that mix include pay for expenses incurred on the
employer's behalf, discretionary bonuses, premium payments for overtime
work or work on weekends and holidays, and payments for occasional periods
when no work is performed due to vacation, holidays or illness.
Paying employees a fixed salary with the stated expectation that the job will
consume 45 hours a week doesn't exempt an employer from paying overtime.
In such a scenario, when the weekly salary was, for example, $405, you'd need
to first calculate the hourly rate:
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Then, determine the overtime rate by multiplying the hourly rate by 1.5.
Subtract the base hourly rate from the overtime rate. $13.50 minus $9
equals $4.50.
Five hours time $4.50 equals $22.50 of additional pay to be added to the
salary.
The reason you wouldn't pay time-and-a-half ($13.50) for those extra five
hours is that the base wage for those extra hours is already built into the
salary.
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Finally, employees cannot waive their right to overtime pay. And even if you
have a policy stating that you won't pay employees if they work overtime, or
do so without express authorization, that will "not impair the employee's right
to compensation for compensable overtime hours that are worked," the DOL
states.
The bottom line is, it's up to you to take reasonable precautions to ensure that
the tasks you ask and expect employees to perform don't lead employees to
working overtime to complete them, or else be prepared to pay overtime.
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