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Event Calendar / Calculating Overtime: Are You in Compliance?
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Calculating Overtime: Are You in Compliance?
Calculating overtime pay for nonexempt employees sounds so simple. Common folk lore says you simply count the hours the employee works beyond 40 hours a week. Then you multiply that by 1.5 times their hourly pay rate and you’re done right? Not so fast. The truth is that overtime rules and the mathematics required to arrive at the correct calculation can be extremely tricky. Overtime under the Fair Labor Standards Act is based on a unique term, created in 1938, known as the regular rate of pay. And calculating the regular rate of pay is more complex than it appears. What’s included in the calculation? The reasonable cost of meals, lodging, nondiscretionary bonuses, commissions, on-call pay, shift differentials, cash benefit payments from Section 125 Cafeteria Plans, the list goes on… And that’s just computing the regular rate – we haven’t even touched overtime yet! For example when a bonus must be included in calculating the rate what overtime does it apply to? When the bonus is paid or when the bonus was earned? What if the bonus spans a long period of time such as a quarter or a full year?

Then what happens if you get it wrong? Nobody pays attention do they? According to the Department of Labor, 300 new wage and hour investigators were hired in 2009 to respond to complaints and violations. By the end of 2010 the DOL announced they had collected more than $300 million in back wages for more than 385,000 workers.

Penalties for overtime violations can be severe with the possibility of fines, imprisonment or both! Add civil suits to the mix and the results can be devastating to any business no matter how large or small! And just to make it interesting, most states use the same definition to calculate overtime as the FLSA does. So one error can earn you double the penalties.

Vicki's Book information: This book covers all facets of the federal wage and hour laws concerning paying employees, including minimum wage and overtime. It explains the requirements and gives clear examples for calculating overtime correctly under the Fair Labor Standards Act when bonuses or other payments are included. It discusses requirements needed to categorize employees as exempt. The book explains the factors that the IRS uses to determine who is an employee and who can be classified as an independent contractor. The publication is one of the required text books for the Payroll Practice and Management series offered through continuing education departments throughout the country. Written in an easy to read format it can be used to train employees in your payroll department or as a stand alone reference guide.

To purchase this book, please go to this link:

04/05/2012 12:00 pm o'clock
04/05/2012 1:00 pm o'clock
Vicki M. Lambert, CPP

Webcast information

Who should participate:

anyone who must understand the requirements of how to calculate gross wages under the FLSA including clerks, administrators, supervisors, and managers;

What you will learn:

• How to calculate the regular rate of pay • The eight narrowly construed exceptions to inclusion of payments in the regular rate • When you must include a bonus in calculating your employee’s overtime pay • How to handle overtime calculations once you've determined that a bonus qualifies as includable wages • How to calculate the overtime premium • How the type of work week used affects calculating overtime

Recommended Resources:

The Payroll Advisor's Guide to Federal Wage & Hour Law The Top Three Money Makers for the Department of Labor and How to Avoid Contributing to Them
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