Overtime Calculation Examples

 

Important note: The following calculation examples assume the employee is non-exempt from overtime requirements of the Colorado Minimum Wage Order Number 30. For more information about Wage Order coverage contact the Division at 303-318-8441.

The calculation examples are intended to serve as a general guideline for commonly encountered overtime pay situations. The calculation of regular rate and overtime pay should be conducted very carefully, and other methods of calculation not described  may be appropriate depending upon the particular circumstances.

Salaried Employee
Piece Rate Employee
Tipped Employee
Non-exempt Employee Working Two Jobs


Salaried Employee Overtime Calculation Examples

Salary Paid Weekly for a Fluctuating Workweek Example

A non-exempt employee receives a $500.00 weekly salary. The employee works 50 hours in one specific week (the hours worked may vary weekly). The overtime computation is:

  • Determine the regular rate of pay by dividing the salary ($500.00) by all hours worked in the workweek (50). $500.00 divided by 50 = $10.00/hour. $10.00/hour is the regular rate for that workweek.
  • Regular rate wages (straight time) are: 50 hours x $10.00 = $500.00.
  • The premium overtime rate equals one-half the regular rate times the number of hours over 40 in a workweek: $10.00 x .5 x 10 hours = $50.00
  • Total wages owed = $500.00 + $50.00 = $550.00


Salary Paid Weekly For a Fixed Workweek Example

A non-exempt employee receives a $500.00 weekly salary for an agreed, fixed workweek of 40 hours. The employee works 43 hours in one week. The overtime calculation is:

  • Determine the regular rate of pay by dividing the weekly salary ($500.00) by 40 (the agreed, fixed hours) = $12.50/hour. $12.50/hour is the regular rate.
  • Regular rate wages (straight time) for the week are the agreed amount of $500.00 PLUS the three additional hours at $12.50/hour = $537.50.
  • The premium overtime rate equals one-half the regular rate times the number of hours over 40 in a workweek: $12.50 x 3 x .5 = $18.75.
  • Total wages owed = $537.50 + $18.75 = $556.25


Salary Paid Monthly Example

A non-exempt employee receives a salary of $4335.00 per month. The employee works 50 hours in one week. The overtime computation is:

  • Determine the weekly amount earned. Multiply the monthly salary of $4335.00 by 12 (months in a year). $4335.00 x 12 = $52,020.00/year. Divide this result by 52 (weeks in a year) to determine the weekly amount. $52,020.00/52 = $1000.38/week.
  • Divide the weekly amount by hours worked to determine the regular rate. $1000.38/50 = $20.00/hour. This is the regular rate (carry out your math to two decimal places).
  • Regular rate wages (straight time) are $1000.38.
  • The premium overtime rate equals one-half the regular rate times the number of hours over 40 in a workweek: $20.00 x 10 hours x .5 = $100.00
  • Total wages owed for the week are $1000.38 + $100.00 = $1100.38.

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Piece Rate Overtime Calculation Example

When an employee is paid on a piece rate basis (for example, a certain amount is paid for every piece, dozen pieces, or for each service completed), the regular rate of pay is computed by first adding together the total earnings for the workweek from all piece rate work plus any other amount from that week for hours worked, waiting time, etc. This sum is then divided by the total number of hours worked in that week. For example, an employee works 50 hours in a week,earns a total of $500.00 for all piece work completed, and also receives a $100.00 nondiscretionary bonus that week.

  • The regular rate of pay for the workweek is all of the earnings divided by the hours worked. $500.00 + $100.00 = $600.00. $600.00/50 = $12.00
  • The regular rate wages (straight time) for the workweek are $600.00
  • The premium overtime rate equals one-half the regular rate times the number of hours over 40 in a workweek: $12.00 x 10 hours x .5 = $60.00
  • Total wages owed for the week are $600.00 + $60.00 = $660.00.


See Advisory Bulletin: Piece Rate or Piece Work Pay, 18(I), for further details on piece rate workers.

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Tipped Employee Overtime Calculation Examples


(Three Equivalent Methods)

Calculation Assumptions

  1. The applicable minimum wage is $8.00 and the tipped minimum wage is $8.00 - $3.02 = $4.98.
  2. The employee’s tips make up the difference between the tipped minimum wage of $4.98 and the full minimum wage of $8.00.
  3. No other payments occurred during the pay period that would have to be included in the regular rate (e.g., non-discretionary bonuses, commissions, etc.). Note that tips are not included in the regular rate for overtime calculation purposes.
  4. The employee works 50-hours in the workweek, with 10 hours of overtime owed under the 40-hour overtime criterion; no work in excess of the 12-hour overtime criteria occurred.
  5. The rate for overtime hours is based upon the full minimum wage of $8.00, not $4.98.

Example 1: 

Straight time earnings for all hours worked, half-time OT

  • $8.00 x 50 = $400.00 (straight-time earnings for all hours)
  • $8.00 x .5 x 10 (OT half-time premium multiplied by number of OT hours) = $40.00
  • $400.00 + $40.00 = $440.00 (total owed before applying any tip credit)
  • $3.02 x 50 = $151.00 (tip credit which the employer may apply)
  • Total owed by the employer to the employee = $440.00- $151.00 = $289.00

Example 2:

Straight time earning for regular hours worked, 1 ½ OT

  • $8.00 x 40 = $320.00 (straight-time earnings for regular hours)
  • $8.00 x 1.5 x 10 (one and one-half OT premium multiplied by number of OT hours) = $120.00
  • $320.00 + $120.00 = $440.00 (total owed before applying any tip credit)
  • $3.02 x 50 = $151.00 (tip credit which the employer may apply)
  • Total owed by the employer to the employee = $440.00- $151.00 = $289.00

Example 3:

Tip credit applied before calculations

  • $4.98 x 40 = $199.20 (tip credit subtracted first, multiplied by regular hours)
  • $8.00 x 1.5 = $12.00 (one and one-half OT premium based upon full minimum wage)
  • $12.00 - $3.02 = $8.98 (OT premium rate after applying the tip credit)
  • $8.98 x 10 = $89.80 (OT premium rate after applying the tip credit multiplied by OT hours)
  • Total owed by the employer to the employee = $199.20 + $89.80 = $289.00

See Advisory Bulletin: Tips, 14 (I), for more information on tipped employees.

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Non-Exempt Employee Working Two Jobs

An employee working two non-exempt jobs at different hourly pay rates for the same employer within a specific workweek may be paid overtime using either of the following methods, provided that the employee is notified in advance which method will be used:

  • Overtime is paid at time and one-half the regular rate of pay for the job during which the actual overtime occurs.

OR

  • Overtime is paid at time and one-half the regular rate, which is computed as a weighted average based upon the rates for each position. In other words, the employee's regular rate for the workweek is determined by adding together all the wages and compensation for the workweek from both jobs, and then dividing this amount by the total amount of hours worked from both jobs.


For example, in one workweek, a non-exempt employee works 40 hours per week at $15 per hour, and then performs 10 hours of different duties at different times during the workweek at a rate of $10 per hour. The weighted average regular rate of pay for this employee would equal [(40 X $15) + (10 X $10)] / 50 = $14 per hour regular rate. Thus, using this calculation method, the employee would be owed overtime at a rate of $14 X 1.5 = $21 per hour for overtime work.

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References

Advisory Bulletin: Overtime Pay, 10(I)
29 Code of Federal Regulations 548
29 Code of Federal Regulations 778.111 (Pieceworker)
29 Code of Federal Regulations 778.113 (Salaried Employees General Information)
29 Code of Federal Regulations 778.114 (Salary for Fluctuating Hours)
29 Code of Federal Regulations 778.418 (Pieceworkers)

Websites

U.S. Department of Labor
FLSA Overtime Fact Sheet
Code of Federal Regulations Online Access
Wage and Hour CFR
FLSA Overtime Calculator

 
Quick Links

Overtime
Wage Order Coverage
Exemptions from the Wage Order
Compensatory (Comp) Time