Wage and hour law
What is regular rate of pay?
Also called: regular rate, blended rate
The regular rate is the hourly figure overtime is based on, and it is usually more than the base wage because it blends in nondiscretionary bonuses and shift differentials.
Take total straight-time earnings for the workweek, then divide by hours worked. Production bonuses, attendance bonuses, and shift premiums go into that total. Genuinely discretionary gifts and some benefit contributions stay out.
This is the single most missed piece of overtime math in small businesses. Paying time and a half on the base wage while the employee also earned a $100 production bonus underpays the overtime, and the shortfall compounds every week it repeats.
Multiple pay rates in one week blend too. Someone who works some hours at $18 and some at $22 has one regular rate for that week, calculated from the weighted average.
Example
40 hours at $20 plus a $100 nondiscretionary bonus is $900 for 40 hours, a regular rate of $22.50. Overtime is $33.75 an hour, not $30.
Source: 29 CFR 778.108 (the regular rate)
Handle this automatically
Kloqk is a free employee time clock for small business. It records the punches, applies your rules, and does this arithmetic for you.
Related terms
Overtime
Overtime is the extra pay a non-exempt employee earns for hours past 40 in a workweek, at no less than 1.5 times their regular rate under federal law.
Time and a half
Time and a half means 1.5 times the regular rate, the federal minimum premium for overtime hours.
Shift differential
A shift differential is extra pay for working a less desirable shift, such as nights or weekends, usually a flat amount per hour or a percentage of base pay.
General information for US employers, not legal advice. Wage and hour rules change and vary by state, so confirm specifics with your state labor agency or counsel.