Jeffrey H. Ruzal, a Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s New York office, was quoted in SHRM.org, in “Anticipated ‘Regular Rate’ Rule May Clarify How to Calculate Overtime,” by Allen Smith.

Following is an excerpt:

Jeffrey Ruzal, an attorney with Epstein Becker Green in New York City, provided the following example of how the regular rate is used in the calculation of pay.

Suppose Mary earns $15 per hour, receives a $100 nondiscretionary bonus in the relevant workweek, and works 50 hours in that same workweek. To calculate the regular rate, the employer must first ascertain the total amount of earnings in that workweek by multiplying Mary's $15 hourly rate by the total number of hours worked, or 50, which equals $750. Next, add to that subtotal the $100 nondiscretionary bonus, which equals $850. Divide $850 by the 50 hours worked to arrive at a $17 regular rate. Accordingly, Mary is entitled to $680 for her first 40 hours of work ($17 x 40 hours), plus $255 for her 10 overtime hours ($17 regular rate x 1.5 = $25.50, and $25.50 x 10 overtime hours = $255) for a total of $935.

DOL regulations identify only a few types of payments that may be excluded from the regular rate when calculating overtime, Ruzal explained. They include:

  • Discretionary bonuses.
  • Payments made when no work is performed, such as vacation or holiday pay.
  • Gifts.
  • Irrevocable benefits payments.
  • Premium payments for work performed outside an employee's regular work hours.
  • Extra compensation paid according to a private agreement or collective bargaining.
  • Income derived from grants or options.

Services

Jump to Page

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.