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Calculating Overtime Pay. STEPHEN P. POSTALAKIS Blaugrund, Herbert, Kessler, Miller, Myers & Postalakis, Incorporated [email protected] Ohio Association of County Boards Serving People with Developmental Disabilities Personnel Council September 29, 2010.

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Calculating Overtime Pay

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Calculating Overtime Pay

STEPHEN P. POSTALAKISBlaugrund, Herbert, Kessler, Miller, Myers & Postalakis, Incorporated [email protected] Association of County Boards Serving People with Developmental DisabilitiesPersonnel CouncilSeptember 29, 2010


First Step: Determine the Base Rate of Pay

  • What is the base rate of pay?

    • Hourly rate, plus:

      • On-call pay;

      • Non-discretionary bonuses;

      • Retroactive wage increases;

      • Shift differential; and

      • Longevity pay.


On-call pay

  • Things to remember:

    • On-call pay is included in determining the employee’s base rate of pay.

    • Hours spent “on-call” are not necessarily “hours worked” when determining whether the employee worked in excess of 40 hours in a work week.


Non-discretionary bonuses

  • Examples:

    • Bonuses for educational attainment;

    • Bonuses for attendance, production; and

    • Holiday bonuses that are so regular that employees expect them.


Items excluded from calculations of the base rate of pay:

  • Discretionary bonuses.

  • Sick leave buyback.

    • Featsent v. City of Youngstown, 70 F.3d 900 (6th Cir. 1995) (Sick leave buyback excluded from calculation of base rate of pay).

  • Payments made for occasional periods where no work is performed.


Discretionary Bonuses

  • Amounts paid in recognition of service if BOTH:

    • The fact of the payment, AND

    • The amount of the payment

  • are determined in the sole discretion of the employer, AND

  • The bonus is not paid pursuant to any prior promise, agreement, or contract causing the employee to expect the bonus.


Payments made for occasional periods where no work is performed

  • Holidays, vacation, illness, or unavailability of work.

    • Holiday pay and regular pay, paid for the same day – the employee’s base rate of pay is not double.


What if the add-on applies to past work weeks?

  • This often occurs when one of the add-ons is paid less frequently, but applies to a longer period of time, i.e. a quarterly bonus.

    • Disregard the bonus until the workweek in which it is paid.

    • When the bonus is paid, calculate any catch-up payment owed for the period covered by the bonus.


Example: Stephanie Postal

  • Stephanie Postal gets a $500 bonus each quarter. The bonus is included in her pay for the last week of the quarter.

  • Stephanie’s normal pay rate is $10.00/hour.

  • In week 4 of the 12 week quarter, Stephanie worked 50 hours. In her pay for week 4, she was paid overtime at the rate of $15 for the 10 overtime hours. In every other week, Stephanie worked 40 hours.

  • The $500 bonus was included in Stephanie’s pay for week 12 of the quarter.


Example: Stephanie Postal

  • Stephanie’s adjusted base rate of pay for the quarter is:

    • Her base rate of $10.00/hour, PLUS

    • An additional $1.02/hour.

  • She actually worked 490 hours (11 weeks at 40 hours and one week at 50 hours).

  • Taking the total amount paid ($5,400) divided by the total hours worked (490) results in a base rate of $11.02 per hour.


Example: Stephanie Postal

  • Although her employer paid time and one-half for the ten hours overtime Stephanie worked in week 4, it only paid time and one-half on the $10.00 base rate ($15/hour), not her adjusted base rate of $11.02 (16.53.hour)

  • The employer must include an additional $15.30 in her check for week 12 ($1.53 X 10 hours overtime).


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