The regular rate is a calculation, not a number on your contract
The regular rate is your total pay for the workweek divided by the total hours worked, excluding a defined list of items. If your only pay is an hourly wage, the result is that wage and nothing changes. As soon as anything else is added, the two diverge.
What must be included
- Non-discretionary bonuses — anything promised in advance for meeting a target: production, attendance, safety, quality, retention.
- Shift differentials — extra for nights, weekends or unpopular shifts.
- Commissions, whether paid weekly or later.
- On-call pay for compensable on-call time.
- The value of certain non-cash payments provided as compensation.
What may be excluded
- Genuinely discretionary bonuses — decided after the fact, in amount and in whether to pay at all. Calling a bonus discretionary does not make it so; a promised "discretionary" bonus is non-discretionary.
- Gifts for holidays or special occasions not tied to performance.
- Paid time off — holiday, vacation and sick pay are not hours worked.
- Reimbursed expenses at reasonable cost.
- Premium pay already paid for overtime, so it is not counted twice.
A worked example
Someone earns $20 an hour and works 45 hours. They also receive a $100 production bonus for that week.
- Straight-time pay: 45 × $20 = $900.
- Plus the bonus: $900 + $100 = $1,000 total.
- Regular rate: $1,000 ÷ 45 = $22.22, not $20.
- Overtime premium owed: the extra half-rate on 5 hours = 5 × $11.11 = $55.55.
- Total due: $1,000 + $55.55 = $1,055.55.
A system that ignores the bonus pays 5 hours at $30 instead, giving $950 plus the $100 bonus = $1,050. The shortfall is small per week and entirely systematic — it recurs every week a bonus is paid, for every employee who worked overtime.
Bonuses paid later
A quarterly or annual non-discretionary bonus still has to be apportioned back across the weeks it covers, and additional overtime paid for any of those weeks that contained overtime hours. This retroactive recalculation is commonly skipped, and it is a frequent finding in wage investigations.
If you are salaried and non-exempt
The regular rate is the salary divided by the hours it is intended to cover. If a $800 weekly salary is meant to cover 40 hours, the regular rate is $20 and overtime beyond 40 is paid on top at $30 an hour.
Watch for a salary described as covering "all hours worked". Under that arrangement the regular rate falls as hours rise, and the overtime owed is only the extra half-time. It is lawful in specific circumstances and frequently applied where those circumstances do not exist.
Two rates in one week
If you work at different rates — say $18 in one role and $22 in another — the regular rate is the weighted average across the week, and overtime is based on that average. Paying overtime at whichever rate you happened to be working in hour 41 is not correct.
How this tool handles it
The timesheet calculator takes a single hourly rate and treats it as the regular rate. That is correct when your pay is only an hourly wage.
If you also receive a non-discretionary bonus, a shift differential or commission, work out the regular rate first using the method above, then enter that figure as the rate. The hours split will be right either way; only the money depends on it.
Related
- Daily and weekly overtime, and the trap between them
- Salaried does not mean you lose overtime
- If the numbers do not add up
References
- DOL Fact Sheet 56A — the regular rate.
- 29 CFR Part 778 — overtime compensation in detail.