Calculating Overtime Pay

1. Calculating Overtime Pay STEPHEN P. POSTALAKISBlaugrund, Herbert, Kessler, Miller, Myers & Postalakis, Incorporated spp@bhmlaw.comOhio Association of County Boards Serving People with Developmental DisabilitiesPersonnel CouncilSeptember 29, 2010

2. 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.

3. 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.

4. Non-discretionary bonuses • Examples: • Bonuses for educational attainment; • Bonuses for attendance, production; and • Holiday bonuses that are so regular that employees expect them.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.

10. 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.

11. 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).