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
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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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