Posts Tagged ‘Calculating Overtime’

Overtime Pay: You Cheated Me!

Tuesday, September 28th, 2010

Overtime Pay CalculationSeptember 2010
By: Walter J. Liszka

Over the last six years, our firm has seen a startling increase in Federal Court litigation to collect unpaid overtime pay. These multi-employee lawsuits – either of the class action or opt-in/opt-out variety – have been filed to enforce both federal (Fair Labor Standards Act) and state (for example, Illinois Wage Payment and Collection Act) concepts and are creating a potentially substantial back pay liability. It also should not go without notice that under principles of both the Fair Labor Standards Act and many state wage payment laws, successful plaintiffs’ attorneys are entitled to collect “reasonable attorneys’ fees” for their efforts in enforcing these statutory requirements. As an example, in one case that is currently pending in our Chicago office, the overtime wages due employees amounted to less than $7,000 while the claim for attorneys’ fees came to over $100,000. Of course we are fighting tooth and nail to reduce these fees but the amount of reasonable attorneys’ fees will ultimately be decided by the Federal Court Judge currently assigned the case and/or the 7th Circuit Court of Appeals.

Now entering the scene on the Department of Labor’s website is the Fair Labor Standards Act Overtime Calculator Advisor ( According to the DOL, the website has been developed “to help employees and employers understand the overtime pay requirements” by providing a “simple procedure” to calculate overtime for a sample pay period. Having attempted to use this system, there is some doubt as to how simple it is to use and the writer is reminded of the old adage “I’m from the government and I’m here to help you.” While some may claim the website is a learning tool, it is this writer’s opinion that it will only lead to greater conflict between employees and employers over the calculation of overtime hours.

It is important for employers to be aware of this website and, more importantly, to understand the accessibility of such information to employees. While this article does not address whether or not an individual employee is exempt or non-exempt (i.e. entitled or not entitled to overtime compensation), it is extremely important for employers to acquaint themselves with tools such as the Overtime Calculator Advisor because in all likelihood your employees will be familiar with the same.

In almost every case, in the calculation of overtime pay, time and one-half must be paid on the employee’s regular rate of pay for all hours worked over 40 hours in a calendar work week. The regular rate of pay includes not only the employee’s hourly wage but may include additional compensation, such as non-discretionary bonuses, attendance bonuses or more complex scenarios that include employees receiving different rates of pay for working at two or more jobs with the same employer in one calendar work week. In these situations, absent agreement to calculate otherwise, the employee’s regular rate of pay would be determined by calculating the amount of time the employee worked at each job. An hourly employee’s “regular rate” is the hourly rate of pay plus any additional compensation. For example: an employee worked in one calendar work week on a job paying $11.00 per hour for 30 hours and on a second job, paying $14.00 per hour for 20 hours. The employee’s “regular rate of pay” for that work week is:

((30 hours x $11.00) + (20 hours x $14.00))/50 = $12.20 per hour

The employee’s CORRECT PAY would be:

(50 hours x 12.20) + (10 hours x 6.10)
610.00      +          61.00           =         $671.00

If an employee has an hourly rate of pay of $10.00 per hour and receives an Attendance Bonus for that week of $100.00, if the employee works 44 hours, that employee’s “regular rate of pay” is:

((44 hours x $10.00) + $100.00)/44 = $12.27 per hour

The employee’s CORRECT PAY would be:

(44 hours x 12.27) + (4 hours x 6.14)
$539.88       +        $24.56          =         $564.44

It has been our experience that one of employers’ biggest misunderstandings is how to correctly figure and pay overtime.

It is strongly suggested that every employer become familiarized with the DOL website and do its own self audit to assure that employees are receiving the correct overtime pay entitlement before an employee, group of employees or a plaintiff’s lawyer raises this issue.

Submitted By:

Walter J. Liszka
Wessels Sherman Joerg Liszka Laverty Seneczko P.C.
952.746.1700 Office

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney or an HR Professional.