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How to determine the “regular rate of pay”

When sorting out wage and overtime pay issues, you should determine your “regular rate of pay.” This value considers your overall earnings, including your salary, commissions, hourly income and other forms of remuneration. Your regular rate of pay can vary, but it must stay above or equal to the appropriate minimum wage.

There are many ways to calculate this value, depending on the employee’s wage arrangement. It can also factor in the employee’s typical hours worked in a week, whether their daily shifts have eight, ten or twelve hours.

The official computation of your regular rate of pay could also vary to accommodate the issue at hand, such as the following:

  • Hourly rate: This computation can be straightforward because you earn a specific amount every hour. Still, it must include shift differentials and other nonhourly incentives.
  • Regular salary: This amount can be in monthly or annual values. If it is monthly, you can multiply it by 12 to get the yearly amount. Then, divide it by 52 weeks. Dividing it further by 40 weekly work hours can result in an hourly rate.
  • Commission-based remuneration: The computation can vary depending on the nature of the work delivered. The commission rate multiplied by the produced output and then divided by the expected work hours in the week can help determine a value for the hourly rate. However, you could adjust the calculation as needed to consider other factors in the arrangement.
  • Multiple wage rates: Some professions call for different rates in the workweek, depending on the work performed. In these cases, the regular rate of pay is the weighted average of these earnings.

The correct computation of the regular rate of pay can change, mainly if their earnings include a combination of these remuneration types.

Addressing violations and resolving them appropriately

Employees must understand their earning arrangements fully. Your employment agreement should clearly define what you earn, so you know when there are inconsistencies. You should address discrepancies involving regular earnings and overtime pay immediately. If these issues remain unresolved after consulting your employer, you could file a claim to settle them.

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