Different Methods for Calculating Overtime

When most people think about overtime, they think “time-and-a-half.”

That is, for each hour worked over 40 hours in a week, a worker often expects to be paid their hourly rate for those extra hours plus an additional 50% of their hourly rate for those hours above 40.

For example, let’s say you earn $8 an hour as a cashier, your hourly overtime rate would be $8 per hour + $4/hr (50% of the hourly rate), or $12 an hour for each hour worked over 40 hours.

Certain industries have found ways to circumvent the time-and-a-half rate. However, there are restrictions on such tactics. In some industries, such as waste collection, companies may pay a “daily rate,” which they contend already includes the hourly rate for all hours worked – including any overtime hours.

For instance, 50 hours in a week and getting paid $400 for that week. Instead of saying their hourly pay is $10 ($400 / 40 hours), the company contends that the hourly pay is really $8/hr ($400 / 50). Right there, the company has cut the employees hourly rate by $2 per hour.

Moreover, under this method of calculation, the more overtime as employee works, the lower the overtime rate.

While this method for calculating overtime may be legal, an employer may use it only under certain circumstances. Companies make mistakes when creating and/or applying their formulas.

Some employers pay a fixed hourly rate for all hours worked, including overtime hours. For example, an employer may pay $10 per hour for 30, 40, or even 50 hours in a work week. Under this scenario, the employer fails to pay “time-and-a-half” for overtime. In this case, the employee is owed the difference between the straight-time rate and the proper overtime rate.

Therefore, if you are being paid less than time-and-a-half for your overtime hours worked, consulting an attorney for a free consultation may be valuable to you.

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