Calculating Overtime for Non-Hourly Non-Exempt Employees, and Calculating Overtime on a Bonus
Calculating Overtime for Non-hourly Non-exempt Employees
California Labor Code Section 515(d) states that for the purposes of computing the overtime rate due to a nonexempt full-time salaried employee, the regularly hourly rate is generally 1/40th of the employee’s weekly salary. If the contracted hours are fewer than the legal maximum of 40 regular hours in one work -week, the contracted hours are used as the denominator. All hours over the legal maximum regular hours in any one workweek or workday must be compensated at the resulting overtime rate.
Similarly, when earnings are determined on a piece work, commission, or some other non-hourly basis, the overtime pay due must be computed based on the average hourly rate. This is calculated by dividing the total pay for employment (except for certain exclusions) in any workweek by the total number of hours actually worked.
A group rate for piece workers is another acceptable method for calculating the regular rate of pay. Under this method, the total number of pieces produced by the group is divided by the number of people in the group; each worker is paid accordingly. The regular rate for each worker is determined by dividing the pay received by the number of hours worked. Keep in mind, the regular rate cannot be less than minimum wage.
Computing Overtime on a Bonus
Although discretionary bonuses are excludable when you compute the regular rate of pay, nondiscretionary bonuses are included.
For bonuses based on a percentage of production or some other formula, the overtime premium is half or all (for double-time hours) of the regular bonus rate. The regular bonus rate is calculated by dividing the bonus by the total hours worked (including overtime hours) during the period for which the bonus applies.
For example, if an employee receives a $200 bonus for a workweek in which he worked 50 hours, the regular bonus rate is $4.00 ($200 divided by 50). The employee would be entitled to an additional half of the regular bonus rate ($2.00) for each time –and-one-half overtime hour worked and the full bonus rate ($4.00) for each double time hour, if any.
If the bonus is a flat sum (for example, $500.00 for continuing to the end of the season), the regular bonus rate is determined by dividing the bonus by the maximum legal regular hours worked during the period covered by the bonus. So, if an employee received $500.00 and worked 500 regular hours, the bonus regular rate is $1.00. She would be entitled to $1.50 overtime on the bonus for each time-and-one-half overtime worked and $2.00 overtime on the bonus for each double-time hour, if any.