Overtime Pay When Employees Have Multiple Pay Rates
The Fair Labor Standards Act (FLSA) requires covered employers to pay nonexempt employees overtime for all hours worked over 40 in a workweek. A “workweek” is seven consecutive 24-hour periods (168 total hours) and may differ from your pay period.
When employees work at multiple pay rates in the same pay period, you must account for the hours worked at each rate to determine the correct overtime rate. This calculation depends on your pay schedule and must include supplemental earnings like bonuses and commissions.
1. Weekly Pay Schedules
Overtime is calculated using the weighted average regular rate of the different pay rates earned in that week. For details, see the U.S. Department of Labor’s guidance.
Example – Weighted Overtime (Weekly Pay):
Martin, a nursing assistant, earns $11/hour for his regular 40-hour schedule. One week, he also works 16 hours as a receptionist at $8/hour.
- Step 1: Calculate total straight-time pay:
(40 × $11) + (16 × $8) = $568 - Step 2: Determine regular rate:
$568 ÷ 56 total hours = $10.14/hour - Step 3: Overtime premium:
$10.14 × 0.5 = $5.07/hour - Step 4: Overtime pay:
$5.07 × 16 overtime hours = $81.12 - Step 5: Total gross pay:
$568 + $81.12 = $649.12
2. Non-Weekly Pay Schedules (Bi-Weekly, Semi-Monthly, Monthly)
For non-weekly schedules, Beyond calculates overtime using the highest pay rate for hours worked in the pay period to ensure compliance with FLSA rules. Weighted overtime for non-weekly periods must be calculated manually, then entered into Beyond using a custom field.
Example – Highest Rate Method (Bi-Weekly Pay):
Martin works 80 hours at $11/hour and 16 hours at $8/hour in a bi-weekly pay period.
- Step 1: Straight-time pay:
(80 × $11) + (16 × $8) = $1,008 - Step 2: Overtime premium (highest rate):
$11 × 0.5 = $5.50/hour - Step 3: Overtime pay:
$5.50 × 16 overtime hours = $88 - Step 4: Total gross pay:
$1,008 + $88 = $1,096
Bonuses, Commissions, and Overtime
Because commissions and bonuses are often discretionary and not tied to a specific pay period, Beyond does not include them in overtime calculations.
Need Help?
If you still have any questions, please don’t hesitate to reach out. Our team will be happy to provide answers and assist you in any way we can.