Best Overtime Wage Attorney Answers: Who is entitled to overtime? How should my overtime be calculated? I earn a salary; how do I calculate my overtime rate? How much should my overtime rate be if commissions are part of my income?
Under both the Fair Labor Standards Act (“FLSA”) and Ohio overtime laws, employees who are entitled to overtime wages are entitled to a rate of no less than one and a half times their “regular rate” of pay. The concept of overtime is so ingrained in our society that most people know this. What is often less clear, however, is (1) who is entitled to overtime pay and (2) just how the overtime rate is calculated.
Eligibility is always the first issue. There are two concepts at play here. First is the concept of “coverage.” Then, if there is coverage, there next issue is whether the employee is “exempt” or “non-exempt.”
Coverage means that either the employer or the employee falls under the scope of the FLSA or Ohio’s wage and hour laws. While the FLSA requires either that the employer be engaged in an enterprise with sales of at least $500,000 or that the individual be engaged in work that can be fairly said to involve interstate commerce, Ohio’s wage and hour laws are far less demanding- all that is required is that the employer gross more than $150,000 per year.
Exemption, on the other hand, deals solely with the job duties of the individual employee. Generally speaking, people who fall into the “executive” exemption, “administrative” exemption, “computer professional” exemption, “professional” exemption, and other exemptions such as those covering people who earn more than half their earnings from commissions (and earn at least 1.5 time the minimum wage), farmworkers, and truck drivers who fall under the Motor Carrier Act are not covered by either the FLSA or Ohio’s wage and hour laws. As we have blogged before, titles and being paid a salary do not matter when determining eligibility status.
Once you have determined that you are entitled to overtime, the next issue becomes how much? We have to look to what your “regular base rate of pay” is. If all you earn is an hourly rate, the math is simple- just multiply your hourly rate by one and a half times and you are done. Things become a little more complicated though when the employee in question is paid a salary or commissions.
If you are paid a salary, the math is still fairly simple. Just take your weekly salary (divide your annual income by 52 weeks) and divide that by 40 hours to get your equivalent hourly rate. Then, take that hourly rate and multiply it by one and a half to calculate your overtime rate. You must be paid that overtime rate for all hours worked over 40 in a given week.
For people who are paid commissions, either as a small or large part of their income, the math is a lot trickier. Basically, the commissions earned become part of the “regular rate,” and are factored into the applicable overtime rate. As a result, because commissions can fluctuate, the “regular rate,” and therefore the overtime rate, can vary from week to week.
If commissions are paid on a weekly basis, the math is still fairly simple- all you have to do is add up the total wages, including commissions earned that week, and divide them by the number of hours that worked that week to figure the regular rate of pay. For example, if an employee is paid $10 an hour for 50 hours of work in a week, and earns $100 in commissions, simply take $500+$100/50= $12 per hour. The employee must then be paid one-half of that rate for each hour worked in excess of 40 hours. Thus, in this example, the employee would be entitled to $120 – or an additional $20 of overtime pay as a result of the commission – for his work in excess of 40 hours that week.
Things become a little more complicated for someone who is paid commissions on a monthly basis. You must take the commission payment, divide it by the number of hours worked in the period, and that add that difference to the hourly rate. The resulting number is the “regular rate.” For example, Employee A was given a $192 commission for a period in which he worked a total of 96 hours, including 16 overtime hours. Dividing $192 by 96 gives a $2 increase in the hourly rate. Thus, the employee is due an additional $16 for the time period involved.
This is obviously complicated, and as a result, many employers get the math wrong. For example, in the recent case of Chookey v. Sears Roebuck & Co, Sears, got into trouble when it improperly calculated the overtime rate of over 18,000 employees. The issue wasn’t that Sears failed to pay overtime at all, but that it simply did not factor commissions into certain employee’s “regular rate” for the purpose of calculating overtime. Nonetheless, Sears filed a motion to dismiss shortly after the lawsuit was filed, arguing that the plaintiff was in effect seeking “ 2 1/2 times the regular pay rate instead of the standard 1 1/2 times rate.” However, the Judge was fairly quick to point out that Sears simply did not understand the proper way to calculate overtime: “If Sears’ demonstration of what it believes is incorrect about plaintiff’s proposed calculation can be summed up by way of reference to the equation it sets forth [in its reply brief] … it appears as if its math is wrong.”
If you believe that your employer is not paying you all of your wages for all of your lawfully earned overtime compensation at a rate of one and half times your normal wages as requires under the Federal Fair Labor Standards Act or Ohio Minimum Fair Wage Standards laws or you are an nonexempt employee that has been misclassified as exempt, contact the attorneys at The Spitz Law Firm today for a free and confidential initial consultation. Or, maybe you are being misclassified as an independent contractor. The wage and hour lawyers at The Spitz Law Firm will provide you with the best options for your overtime pay dispute situation. If you even think that you may be entitled to overtime pay that you are not being paid, call 866-797-6040.
The materials available at the top of this overtime, wage and hour web page and at this employment law website are for informational purposes only and not for the purpose of providing legal advice. If you are still asking, “Am I entitled to overtime?”, “Does my job have to pay me for …”, “My paycheck is not right…” or “What do I do if…”, the your best option is to contact an Ohio overtime attorney to obtain advice with respect to FLSA questions or any particular employment law issue. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at the top of this page or through this site are the opinions of the individual lawyer and may not reflect the opinions of The Spitz Law Firm, Brian Spitz, or any individual attorney.