Q. We have an add-on to wages of $100 if an employee who is not scheduled to work gets called in within 72 hours. The employee gets paid for the hours worked at his normal wages, with time and a half if it adds up to overtime. The $100 is then added for the hours worked, and taxes are calculated on these earnings as usual. Is this a legal way of rewarding employees for coming in on short notice? –J.S., Oklahoma
A. Your calculation is incorrect. Many employers are surprised to learn that an employee's regular rate, used to calculate overtime, is often more than the employee's base rate. Here, the $100 “add on” must be incorporated into the employee's regular rate for purposes of calculating overtime.
For example, Jane's base rate is $10 per hour. In a week where Jane works 50 hours and earns a $100 “add on,” her regular rate would be: $500 (straight earnings) + $100 (add on) ÷ 50 hours worked = $12 per hour. Jane's total weekly earning would be: $500 (straight earnings) + $100 (add on) + $60 (10 overtime hours x ½ x $12) = $660.