How are Overtime Hours calculated based on Workweek?
Last modified 6/18/2020 8:03:12 AM EST | Added by Paywow Team

According to the Fair Labor Standards Act (FLSA), a salaried non-exempt or hourly employee working more than 40 hours for a workweek are the overtime hours and the employees are eligible for overtime wages. Refer Overtime Calculation for Multiple Job Roles - An Overview to know multiple jobs overtime calculations.

Let’s look at a few scenarios for weekly and semi-weekly payroll on how overtime hours are calculated based on the workweek. 

Scenario - 1

Consider 37.5 hours work week and the organization does not follow 40 hours rule for Over Time. (Hours worked after 37.5 will be considered as Overtime)

Payroll Frequency: Weekly

Total Hours for the payroll: 37.5hrs

If someone works for 39.5 hours in a week (which is more than 37.5 hrs), then that 2 hours will be considered as OverTime.

Example:

Employee Name: Dirk Nannes Jr

Compensation Type: Paid by the Hour

Wages: $10 Per Hour

In Payroll Step 1, calculation should be "Regular Hours"  37.5 * $10 = $375.00

"Overtime Hours" 2*15  = $30.00

Scenario - 2

Consider 37.5 hours work week and organization follow 40 hours rule for Over Time. 

Payroll Frequency: Semi-Monthly

Total Hours for the payroll: 81.25hrs

If someone works for 39.5 hours in a week (which is more than 37.5 hrs), then that 2 hours will not be considered as OverTime. Only after 40 hours will be considered as Overtime

Example:

Employee Name: Jason Sr

Compensation Type: Salary/Eligible for Overtime

Wages: $100 Per Week

1) $100 * 52 weeks = $5,200 (Which is yearly salary)

2) 37.5 hrs * 52 weeks  = 1950 hrs (For Annual)

3) $5,200/1950 hrs  = $2.666666666666667/hour

In Payroll Step 1, calculation should be "Regular Hours" 81.25 * $2.666666666666667 = $216.67.

Refer Setting up Payroll Work Week to know more about setting workweek for your business in PayWow.