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May 10, 2010
What HR Needs to Know About Calculating Regular Rate of Pay

In a BLR webinar titled "Reducing Overtime Costs: What You Legally Can—and Can't—Do to Keep Workers at Their Straight-Time Rates," Laura P. Worsinger, Esq., explained that overtime pay is based on "the regular rate of pay" (i.e., the compensation normally earned for the work performed).

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Different Kinds of Renumeration

Worsinger said that the regular rate of pay includes different kinds of remuneration:

  • Hourly earnings
  • Salary
  • Piecework earnings
  • Commissions

She added that in no case may the regular rate of pay be less than the applicable minimum wage.

How to Calculate the Regular Rate of Pay

Worsinger offered the following formulas to calculate the regular rate of pay:

  1. If the worker is paid on an hourly basis, that amount is the regular rate of pay.
  2. If the worker is paid two or more different rates by the same employer, the regular rate is the "weighted average" (i.e., divide total earnings for the workweek, including earnings during overtime hours, by the total hours worked during the workweek, including the overtime hours).
  3. If the worker is paid a salary, the regular rate is determined as follows:
  • Multiply the monthly remuneration by 12 (months) to get the annual salary.
  • Divide the annual salary by 52 (weeks) to get the weekly salary.
  • Divide the weekly salary by the number of hours worked (in California, divide by 40 or less).

Laura P. Worsinger, Esq. is Of Counsel with the Los Angeles office of Dykema Gossett PLLC. She has broad counseling and litigation experience and specializes in the defense of employers in individual and class actions involving wage and hour violations, misclassification, discrimination, wrongful termination, and other employment-related proceedings. She can be contacted at lworsinger@dykema.com.

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