Q: What is an employee’s regular rate of pay? Is it just what they make per hour of work?
A: Not exactly. An employee’s “regular rate of pay” is the amount used to calculate their overtime rate for a given time period. You might think of it as an average, of sorts.
An employee’s regular rate is determined by adding up the amount paid for their work, as well as earnings from non-discretionary bonuses (such as those tied to performance or retention), then dividing that amount by the total hours worked.
For example, let’s say Anna earns $10/hour for inside sales work and $15/hour for bookkeeping work. This week, she worked 24 hours in inside sales and 20 hours as a bookkeeper. She also received $50 in commissions that are attributable to this workweek. Her regular rate of pay for this workweek would be calculated as follows:
($10 x 24) + ($15 x 20) + $50 / 44 hours = $13.41/hour (her “regular rate” for the workweek)
Under federal law, non-exempt employees should be paid 1.5 times their regular rate of pay for any hours worked over 40 in a workweek. This means that Anna’s overtime rate would be $20.11 per hour, based on her mix of hourly rates and commission.
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