How to Calculate Overtime Pay
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If you are eligible for overtime pay in Massachusetts, you should understand the basic rules for calculating the overtime pay that you should receive. This is important so you know how to review and understand your pay stubs. It is also important if you are separating from a job and need to know if you have been paid correctly.
Overtime Pay: What is a Week?Federal and Massachusetts overtime laws require that non-exempt employees receive time and a half for hours worked over 40 in a week.
But what is a week? For overtime purposes, a week is any single period of seven consecutive days. This usually runs from Sunday through Saturday for most employers. It does not have to start on a Sunday, but it has to start on the same day every week. Overtime is not averaged over multiple weeks, even if you are paid every two weeks instead of weekly. This means you might be owed overtime even if you worked less than 80 total hours in a two-week period. In a two week paycheck, however, the company will report your total hours, not your hours per week. If your schedule varies, this can be confusing to keep track of. For example, if you are a restaurant or retail worker who is assigned different shifts each week, you may work six shifts between Sunday and Saturday one week and only four the next. Assuming your employer starts the week on a Sunday, you will want to know the hours you put in the first week as they could easily exceed 40. How to Calculate the Overtime PremiumIf you are paid on an hourly basis, this is fairly straightforward math: your regular rate of pay times 1.5. So if your regular rate of pay is $16 per hour, your overtime hours (hours over 40) should be paid at $24 per hour.
It is possible to be eligible for overtime even if you are paid on a salary, if your job duties are not exempt duties. So how do you calculate your overtime rate in that situation? There are two ways. One is to take your weekly salary and divide it by 40 hours to arrive at a regular rate of pay, and multiply that by 1.5. So at a weekly salary of $700, your hourly rate would be $17.50 an hour and your overtime rate would be $26.25. Another method, which is only available under certain circumstances, is the "fluctuating work week" method. If the employee is paid a set salary no matter the number of hours worked in a week, and the number of hours that employee works in fact varies from week to week, and the employer and employee have agreed on this compensation method, an employer can use this calculation. Basically, the set salary for the week is divided by the total hours worked in the week (including overtime hours) to arrive at a regular rate of pay. The employee is then entitled only to the overtime premium- 0.5% of the hourly rate- for the extra hours. This method assumes the agreed salary covers "straight time" for all hours, and that the only thing owed is the 0.5% premium. Under this method, an employee making $700 per week and worked 48 hours would be paid "straight time" for all 48 hours at $14.5 per hour, and $7.29 per hour for the additional 8 hours. This is clearly a more favorable calculation for the employer, and is not appropriate or legal in all circumstances. |
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How to Calculate Overtime Pay: Travel Time and PTO
The overtime premium applies to hours actually worked in excess of 40 in a week. This means if you have 16 hours of paid vacation or sick time in a week and work 30 hours in the remaining days that week, you have not crossed the overtime threshold. This is also true for any other form of paid time off, such as personal days or paid leave periods.
If you have a job where you travel between worksites during the day, it is also important to understand the travel time rules. You can learn more about travel time rules here- in short, the travel to your first worksite from home and from your last worksite at the end of the day is usually not considered working time. That means this time does not count in determining how many hours you worked for overtime purposes.
The travel time in between those assignments does count. You may be paid at a different rate for that travel (as long as it is minimum wage), but all of those hours count toward 40.
If you are paid at a different rate for travel time, the calculation of the rate for overtime hours becomes a little more complicated. This is because your employer can calculate a "blended rate" that reflects the average of your travel and actual working time. Your overtime premium pay will be 1.5 times that blended rate.
If you have a job where you travel between worksites during the day, it is also important to understand the travel time rules. You can learn more about travel time rules here- in short, the travel to your first worksite from home and from your last worksite at the end of the day is usually not considered working time. That means this time does not count in determining how many hours you worked for overtime purposes.
The travel time in between those assignments does count. You may be paid at a different rate for that travel (as long as it is minimum wage), but all of those hours count toward 40.
If you are paid at a different rate for travel time, the calculation of the rate for overtime hours becomes a little more complicated. This is because your employer can calculate a "blended rate" that reflects the average of your travel and actual working time. Your overtime premium pay will be 1.5 times that blended rate.
How We Can Help
We can help you navigate these issues and get clarity on your rights and obligations as an employer or an employee. Read more about some example overtime law cases we have handled. You can use the button below to schedule a call back from a member of our team, or give us a call at 781-784-2322.
