Learn How to Calculate Your Overtime Rate 2022

Posted on Monday June 27, 2022

Knowing your proper overtime rate can be more complicated than it might seem. Employers make mistakes and deny employees their proper overtime pay, and employees should seek help from a California overtime lawyer who can protect their rights. 

Millions of employees across the United States – many of whom are in California – are considered to be nonexempt employees, which means that they are entitled to overtime pay under the California Labor Code and the Fair Labor Standards Act (FLSA). However, knowing that you should receive overtime rates and ensuring that you receive the proper amount you deserve are two different matters. If you believe that you have been denied overtime pay, you should not wait to speak with a California overtime lawyer who can assess your rights and options.

Your Regular Rate of Pay

Generally speaking, your overtime rate should be 1.5 times your regular rate of pay for work exceeding eight hours per day or 40 hours per week. You might assume that determining your overtime rate should be a fairly straightforward calculation, though it can be complicated for many California employees. The regular rate of pay might include hourly wages, salary, bonuses, commission, piece rates, and more. The following are some examples of how to calculate your overtime rate. 

Hourly employees – Many people receive hourly compensation for their work, and this is often the simplest situation in which to calculate your overtime rate. For instance, if you earn $20 per hour, you can multiply that rate by 1.5, so your overtime rate should be $30 per hour. If you receive two different rates for different types of work, you would base your calculation on the weighted average of the two rates. 

Nonexempt salaried employees – Many salaried employees are still non-exempt and entitled to overtime pay. If you have a fixed salary per month, you will need to determine how that breaks down to hourly rates. For instance:

• Your monthly salary is $3,200
• Multiply the monthly amount by 12 ($38,400)
• Divide that amount by 52 weeks ($738.46)
• Divide the weekly amount by 40 hours ($18.46)
• Multiply the regular hourly rate by 1.5 ($27.69)

Commission or piece-rate employees – Some employers compensate employees by the piece of work completed or another type of commission. In this situation, you should determine how much you were paid for your regular work during a week, and divide that amount by 40 hours. This is the regular rate of pay used to calculate the 1.5 overtime rate. There are other acceptable methods of calculating overtime in these cases, including using a group rate for piece workers. 

Calculating Your Hours Worked (Including Time Setting Up/Cleaning Up)

To calculate the number of hours you work, begin by determining the start and end times. Manual methods such as physical timesheets will indicate the times you clock in and out every day of a pay period.

Convert all times to military time (meaning add 12 to every hour after noon) and transform the hours into decimals by dividing the minutes by 60. To determine total hours, you subtract the time of a clock in from the time of a clock out.

Subtract any time for unpaid breaks. Companies track employee hours through various means, including:

• Handwritten timecards in which employees write down hours on documents and forward them to employers.
• Mechanical time clocks in which employees place paper time cards in machines when they start and stop working.
• Electronic time clocks in which employees present badges or PIN numbers in front of the devices, and they stamp digital time cards to record dates and start and end times.
• Time clock software in which employees record work time with clock software on computers or mobile devices and simply click buttons to clock in and out.

Your Overtime Should Increase As Your Wages Do

The United States Department of Labor states that all employers who require or allow employees to work overtime have to pay the employees premium pay for that overtime work. Any employees covered by the Fair Labor Standards Act (FLSA) have to receive overtime pay for any hours that are more than 40 hours in a workweek and must be at least one and a half times the regular rate of pay.

The FLSA will not require overtime pay for work you perform on Saturdays, Sundays, holidays, or regular days of rest unless you work overtime hours on those days. With certain exceptions, the FLSA does require bonus payments to be included as part of an employee’s regular rate of pay when computing overtime.

Any extra pay for working weekends or nights will be a matter of agreement between the employer and the employee. The FLSA does not stipulate extra pay for weekend or night work or double-time pay.

Misclassification As An Exempt Employee

When you work long hours and the employer knows they will have to pay you overtime for working over eight hours in a day or 40 hours in a week, they may pay you a salary as a way to avoid paying overtime. Exempt employee misclassification involves treating non-exempt workers as exempt workers simply to deny that employee their overtime rights.

Most every California employee is non-exempt by default. When an employer can demonstrate that an employee meets a list of very strict requirements, they can treat the employee as exempt.

Examples of exempt positions under California overtime exemptions law include:

• Executive employees who are managers of two or more employees and have the authority to hire or fire other employees.
• Professional employees who are workers licensed to work in law (such as lawyers), medicine, dentistry, optometry, architecture, engineering, teaching, accounting, or other limited “artistic” professions.
• Administrative employees who are workers in management or general business operations in the areas of tax, accounting, finance, auditing, budgeting, insurance, purchasing, quality control, procurement, marketing, advertising, research, personnel management, safety and health, human resources, labor relations, employee benefits, public relations, computer network, government relations, legal and regulatory compliance, internet and database administration, or similar activities.
• Computer software employees who are skilled computer professionals working in development, design, analysis, documentation, testing, creation, or modification of computer systems or programs.

Does your employer owe you unpaid overtime?

If your employer engages in any violation of California wage and hour laws, you can recover unpaid overtime pay by either bringing a labor board complaint or filing a lawsuit against the employer. Lawsuits against employers for California overtime violations can include failure to pay overtime compensation for work over eight hours in a day, failure to pay overtime compensation for work over 40 hours in a week, failure to pay overtime compensation for working more than six days in a row, requiring employees to work off the clock, requiring employees to work during unpaid lunch breaks, misclassifying employees as “exempt employees,” or misclassifying employees as “independent contractors.”

A California labor board complaint involves employees complaining about improper actions by an employer to a state agency that handles employment disputes. The state agencies that handle employment grievances include the Labor Commissioner’s Office and the Department of Fair Employment and Housing (DFEH).

When employees do not want to bring wage and hour complaints to California’s Labor Commission, they can also file complaints with a state civil court or the U.S. Department of Labor.

Steps To Take If You Suspect Overtime Miscalculations

When the number of hours or amount of pay on your paycheck seems too low, you can first approach your employer to suggest that you are not receiving your rightful pay. Make sure that you prepare properly.

You will want to bring proof of miscalculation of your wages. This may include computer login data, recorded work hours, hourly wages for every type of shift worked, and your own testimony.

When this is not sufficient, you may be able to get more proof through witness testimony, other employee records, or surveillance camera records. When an employer refuses to recognize a claim, you can file a wage claim with your state labor department, which will require filling out specific forms and adhering to certain time limits.

After you complete and file your wage claim with the Division of Labor Standards Enforcement, the agency assigns the case to a Deputy Labor Commissioner who determines how to proceed best. Initial actions taken regarding a claim could include referral to a conference, referral to a hearing, or dismissal of the claim.

When the decision is to hold a conference, the parties receive notification by mail of the date, time, and place of the conference. The conference will determine the validity of the claim and see if there is a claim resolution without a hearing, but a claim that cannot reach a resolution at the conference will usually lead to a hearing.

At a hearing, the parties and any witnesses will testify under oath and there will be an effort to record the proceeding. After the hearing, the parties receive an Order, Decision, or Award (ODA).

Either party has the right to appeal the ODA to a civil court of competent jurisdiction. The court can then set the matter for trial.

If the Order, Decision, or Award (ODA) is in an employee’s favor and the employer refuses to pay the ODA, the Division of Labor Standards Enforcement (DLSE) can have the court enter the ODA as a judgment against the employer. This judgment will have the same force and effect as any other money judgment entered by the court, so an employee can either try to collect the judgment or request an assignment to DLSE.

The best thing you can do for yourself is to speak to a lawyer about the situation.

Discuss Concerns with Our California Overtime Lawyers

Some employers make errors when calculating overtime rates, and employees miss out on compensation that they deserve under California and federal law. Employees might not realize the mistake for some time, after which they are owed considerable back pay. An experienced California overtime lawyer at Mara Law Firm can identify when your wage rights have been violated and take proper action on your behalf. Call (619) 234-2833 or contact us online to discuss a possible case.