Overtime pay – commonly called time and a half – is not as easy to calculate as it would seem. A number of employers – and some accounting software — mistakenly believe that “regular rate of pay” and “hourly rate of pay” are one in the same. Not always true.
Under the Fair Labor Standards Act, employees must be paid more per hour for hours worked over 40 hours. If the employer gets it wrong, the consequences can be costly.
KT Associate Amanda Dennis, in an article that will appear in the KT Addition newsletter, uses the example of the worker whose wage is $8.50 per hour (the hourly rate) plus a $100 bonus. If the worker puts in 50 hours that week, the regular pay would be $525 — $425 ($8.50 x 50 hours) plus the $100 bonus. Overtime would be based on $10.50 per hour (regular rate of pay) – $525 divided by 50 hours.
Her article also looks at workers who do different jobs at different rates of pay for the same company within the workweek. Watch for her article, which will be coming out soon.
Latest posts by Ketel Thorstenson, LLP (see all)
- Tax Tips: Extension - Mar 20, 2018
- Tax Tips: New Tax Rules for Improving Commercial Property - Mar 14, 2018
- Tax Tips: Depreciation - Mar 7, 2018