Employees paid by incentive are also eligible for overtime pay.
Some employees are paid neither a fixed annual salary nor an hourly rate. Instead, they are paid for results produced, typically on a piecemeal basis. For example, a mechanic may be paid a fixed amount for each task performed, such as an oil change or a tire rotation. To determine overtime pay for these employees, calculate an hourly rate equivalent for the period in question and an overtime rate for that period.
Instructions
1. Add the total hours worked by the employee during a week. For example, assume that the employee worked 50 hours from December 12 to December 16.
2. Add all incentive amounts paid to the employee during the time period in question. In the example, assume that the total of incentive amounts is $475.
3. Calculate the employee's effective hourly rate for that week by dividing the total of incentive amounts by the number of hours worked. In the example, $475 divided by 50 hours equals an effective rate of $9.75 per hour.
4. Divide the hourly rate by 2 to determine the overtime premium. In the example, $9.75 per hour divided by 2 equals an overtime premium of $4.88 per hour.
5. Subtract 40 from the total hours worked to determine the number of overtime hours. In the example, 50 hours minus 40 equals 10 overtime hours.
6. Multiply the overtime premium by the number of overtime hours to calculate the overtime pay. In the example, $4.88 per hour multiplied by 10 hours equals overtime pay of $48.80.
Tags: hourly rate, equals overtime, hours worked, incentive amounts, overtime hours, overtime premium