How to Calculate Your Overtime Rate

Posted on Monday October 18, 2021

California labor laws require employers to calculate overtime rates in a specific way. This aims to ensure that every non-exempt employee who works overtime receives the full rate that is 1.5 times their “regular rate of pay.” While the regular rate of pay might seem relatively simple and straightforward, it can be a complicated matter in many situations, and many employers make mistakes. 

Mistakes in overtime calculations can deprive employees of the full overtime pay they deserve. If you believe that your employer underpaid you for overtime hours, speak with a California unpaid overtime attorney today. 

What is the Regular Rate of Pay?

You might assume that your regular rate of pay for overtime is simply your hourly wage. However, the law requires a more complex consideration by employers. This pay rate takes into account all non-discretionary income that you receive, as well as additional remunerations when applicable. Some things that employers must take into account are:

1. Base hourly rate
2. Salaries
3. Shift differentials 
4. Most bonuses
5. Commissions
6. On-call compensation 

Some things that are not included in this calculation are vacation pay, gifts, holiday pay, sick pay, discretionary bonuses, or premiums for rest or meal breaks. 

If you receive hourly pay and no other types of compensation from your job, your overtime rate calculation might be fairly straightforward. However, if you have other types of compensation throughout the year, those should be factored into your overtime rate. 

If you are uncertain about whether your overtime rate is correct, let a California overtime attorney review your pay statements for accuracy. 

Seeking Unpaid Overtime 

Even a slight miscalculation can result in a surprising amount of unpaid overtime. For example:

• Jim earns $16 per hour for regular work hours
• The overtime rate based on the base hourly pay would be $24 per hour
• Jim also earns a quarterly bonus of $2,080
• With the bonus factored in, Jim’s hourly rate would be $28

If Jim works five hours of overtime per week, his overtime pay for the year factoring in his bonus income would be $7,280. If his employer fails to consider the bonus and pays overtime for five hours a week based solely on his base hourly rate, it would be $6,240 per year. This means that Jim would have $1,040 in unpaid overtime each year if his employer failed to correctly factor in the bonus income. 

In this situation, an employee should contact an unpaid overtime lawyer. We can calculate the amount your employer owes you in unpaid overtime and try to negotiate with your employer to fix the matter. If needed, we can file an unpaid wage claim to seek what you deserve.

Speak with a California Unpaid Overtime Attorney

At Mara Law Firm, we represent employees who have their right to fair compensation violated by employers. Whether your claim involves unpaid overtime or another wage and hour issue, we can help. Contact us online or call (619) 234-2833 for assistance as soon as possible.