The formulas
- Regular rate = total includable pay for the workweek / total hours worked
- Overtime premium = 0.5 x regular rate x hours over 40
- Total = straight-time earnings + overtime premium
How it works
Under 29 CFR 778.109 the regular rate is an hourly rate: total remuneration for the workweek, less statutory exclusions, divided by total hours worked. Hours over 40 are already paid at straight time, so the overtime due on top is half the regular rate for each overtime hour.
The rule's own example (778.110(b)): $12 an hour for 46 hours plus a $46 production bonus gives $598, a regular rate of $13, and total pay of $637. Payments excludable under section 7(e)(1) through (8) of the Act stay out of the regular rate.
Illustrative figures only. Check the result against your firm's methodology before relying on it.
Common questions
Does a nondiscretionary bonus change overtime?
Yes. It is part of the regular rate, so it raises the half-time premium for every overtime hour in the week it is earned.
Why add only half the rate for overtime hours?
Every hour, overtime included, is already paid at straight time. Section 778.110(a) adds half the rate for each hour over 40, which brings overtime hours to one and one-half times the rate.
Sources
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