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August 18, 2010
Calculation of Overtime in Your Organization

In a BLR webinar entitled ‘High-Tech Workers: Who’s Entitled to Overtime and Who’s Not; Avoid the Top 5 Most Common Mistakes’, Dan Obuhanych discusses how overtime can be calculated in organization. He provides the following information regarding overtime for non-exempt employees:

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  • ‘Regular rate’ of pay: Work done by an employee in excess of 40 hours per week is entitled to overtime pay of 1.5 times the regular rate of pay for the employee
  • Bonuses: These may be included in the regular rate if this is based on hours worked or efficiency. However, a bonus such as a Christmas bonus does not need to be included in the hourly or regular rate
  • Shift differentials: This is where employees may be paid differently due to their shifts e.g. a graveyard shift in which premiums are paid to work the night shift
  • Stock option profits: These are now excluded from the regular rate as it is very difficult to determine
  • Holiday, vacation pay: This is not included in the regular rate
  • Alternative workweek: Organizations that use the alternative workweek can provide a pay structure that fits this option

Dan Ko Obuhanych, Esq., is an attorney in the Mountain View, California office of law firm Fenwick & West, LLP ( In his counseling practice, Obuhanych advises Fortune 500 companies and small employers on a wide variety of employment and labor issues, including harassment, retaliation, union avoidance, wage and hour issues, independent contractor status issues, and leave and accommodation matters.

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