How should we tally overtime pay when employees earn different amounts at different times? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

How should we tally overtime pay when employees earn different amounts at different times?

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Q. We have employees who work on-call and often accrue overtime hours. They receive a different amount of pay for on-call work than regularly scheduled work time. How do we calculate their regular rate of pay for overtime purposes?

A. As a general rule, the regular rate of pay should include all payments made to or on behalf of an employee, unless a statute or regulation specifically excludes them. Some examples of excludable payments include shift-differential payments and holiday bonuses.

The regulations specifically provide that on-call pay is includable in the employee’s regular rate of pay for purposes of overtime. It is includable even when the on-call hours are not regarded as working time under the Fair Labor Standards Act, and therefore not subject to the minimum-wage requirement.

An example provided in the regulations is a lump-sum payment for an eight-hour on-call period in which the employee was not confined to any particular place. According to the regulation, such a payment should be included in the regular rate of pay, even if the payment was not allocable to any specific hours of work. Therefore, for that workweek, the employee’s on-call pay would be included in her regular rate of pay, even though the eight hours of on-call time would not be included in determining the number of hours she worked.

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