The Fair Labor Standards Act requires overtime at 1.5 times the regular rate, which is total straight-time compensation for the workweek divided by total hours worked, including shift differentials, piece earnings and most bonuses, but excluding items such as qualifying per diem and certain benefits (29 CFR Part 778). When an employee works at more than one rate in a week, the regular rate is a weighted average (29 CFR §778.115). Some states and union agreements add their own overtime rules, such as California’s daily overtime.
Why it matters
Paying overtime on the base rate alone, when the week included differentials or piece pay, underpays overtime and creates back-wage liability.
Worked example
30 hours on days at $30.00 and 15 hours on nights at $32.00: straight time $1,380.00 for 45 hours, a regular rate of $30.67. Overtime premium for the 5 hours over 40 is 0.5 × $30.67 × 5 = $76.67, so gross is $1,456.67 (illustrative).
Common mistakes
- Ignoring shift differentials in the overtime rate.
- Treating piece-rate workers as exempt from overtime.
How os.construction handles it
Payroll in the accounting preview computes the regular rate per workweek, with overtime rules for FLSA, California, Alaska, Nevada and Colorado. See Payroll.