Overtime Calculator

February 28, 2020
Overtime Calculator

Thinking about correctly calculating overtime can be enough to send shivers of trepidation down the spine of even the most confident manager. Just knowing that the Department of Labor (DOL) is standing ready to levy fines for mismanaged overtime will strike fear into the budgets of many. So, what can you do about it? How can you be sure that you're paying your employees correctly and not making unintentional mistakes? Hang in there — we've got you covered. Once you've finished reading our quick guide to effectively using the TriNet Overtime Calculator, you'll be answering overtime questions with confidence.

How do you know when you have to calculate overtime?

There are 5 keys to knowing when you need to calculate overtime:

  1. Your company's status as it relates to the overtime rules
  2. A job's exemption status
  3. An employee's salaried wage (this is not the same as an exempt employee) or hourly rate of pay
  4. An employee's number of hours worked per workweek
  5. Whether your state requires daily overtime to be paid

Once you have these 4 pieces of information, you have all the facts you need to use the overtime calculator with confidence. Let's briefly dig into each of these pieces of information.

Is your company exempt from paying overtime?

There are many different categories of work that could be covered under this section, but for the sake of brevity, we're going to focus on the broadest and most common exemption tests:
  • Does your company employ 2 or more employees? If your answer is yes, your company is potentially subject to the rules that govern overtime.
  • Does your company participate in interstate commerce? If you answered yes to this question, your company is likely subject to overtime rules.
  • Does your company make more than $500,000 in annual sales? If the answer is yes, your company most likely must pay your employees overtime.

Some broad-sweeping exceptions to these categories include:

  • Small-scale ranch, farm, and agricultural businesses
  • Amusement parks that employ seasonal workers
  • Local newspapers with circulations of fewer than 4,000 periodicals
  • Newspaper delivery workers
  • Commissioned-based outside salespeople
  • Hospitals, medical facilities, and businesses that provide residential care for patients
  • Preschools and schools
  • Government-based agencies

Now that you know where your business fits into the puzzle, it's time to look at the jobs in your organization.

Do you have exempt or nonexempt employees?

When you're talking about an employee's exemption status, you're really asking the question, "is the job this employee performs exempt or nonexempt from the Fair Labor Standards Act's (FLSA's) overtime rule?" Whether or not an employee must be paid overtime has very little to do with your actual employee and everything to do with the job duties they perform.

Whether or not an employee must be paid overtime has very little to do with your actual employee and everything to do with the job duties they perform.

There is another salary test that you can take into consideration along with the above tests, and that is:

  • Does your employee make more than $684 per week or receive an annual salary of $35,568 per year?

This test in and of itself does not determine whether or not a position is exempt from overtime eligibility but must be taken into consideration along with the other tests. For example, if a job seems to pass the administrative exemption test but does not make more than $684 per week, the job is not exempt and must be paid overtime.

Does your state require daily overtime payments?

A few states in the United States require a company to pay their employees for more than 8- or 12-hours worked on a particular day. Those states are:

  • Alaska
  • California (there are several caveats and inclusions for California that must be cared for as well)
  • Colorado (12-hours)
  • Nevada (there are some exceptions for this rule)

These states also follow the general rule outlined by the FLSA that any hours worked over 40 in a given pre-defined workweek must be paid overtime. A workweek may run from Sunday to Saturday, Monday to Sunday, etc. The basic premise is that it is a static period of time and is consistently the same 7-day period. Even if your regular pay period is a 14- or 15-day period, overtime is based on a consistent 7-day workweek timeframe, or, as we discussed above, daily. So now that you have a feel for whether or not an employee is eligible for overtime pay, let's talk about how to calculate that pay.

How to use TriNet's Overtime Calculator

When you hired your employees, it was either based on an hourly rate or a salaried rate. The TriNet Overtime Calculator takes all of the guesswork out of the math and makes the process easy for you. As the example below demonstrates, the calculator is divided into calculating overtime for hourly wages and salaried wage earners. Here's an example of how it works: Ray is an hourly employee who makes $19.35/hour. He worked 46 hours this week, 40-hours of straight time and 6-hours of time and a half overtime. You want to provide him with a detailed summary of his pay. You will provide the following information into the calculator, and it will do all of the math for you:

  • Regular hourly pay rate: $19.35
  • Regular hours worked: 40
  • Overtime hours worked: 6
  • Overtime rate: Time-and-a-half (1.5) – A dropdown is provided so you can choose straight-time overtime, time and a half overtime, or double-time overtime.

Once you have provided this information, the system will provide you with the following information:

  • Regular pay: $774
  • Overtime rate: $29.03
  • Overtime wages: $174.18
  • Total wages for the week: $948.18

Similarly, if Charlie had an annual salary of $40,248 per year, you would use the Salary Overtime Calculator section and provide:

  • Salary (annual): $40,248
  • Overtime hours worked: 6
  • Overtime rate: Time-and-a-half (1.5)

The system will then provide you with the following information: Salary:

  • Hourly rate: $19.35
  • Overtime rate: $29.03
  • Overtime wages: $174.18

Along with:

  • Total wages for the week (salary): $948.18

This calculator makes the process much easier for you! However, you may be wondering when straight-time overtime would be an appropriate selection for the overtime calculator.

When to use straight-time overtime

Overtime is necessary when an employee physically works more than 40 hours per week (or 8 hours per day in some state instances). If you pay an employee for holiday, vacation, or sick pay during any day of a workweek, the employee has not physically worked — even though they have been paid for the time. Straight-time overtime is used in these instances. If an employee has actually worked 36 hours during the week, but their time cared, because of holiday pay, indicates 44 hours, those 4 hours over 40 are paid at straight time. It would look like this:

  • Regular hours worked: 36
  • Holiday hours: 8 (straight time)

However, if an employee's time card indicates a total of 49 hours during that same workweek, the time would need to reflect:

  • Regular hours worked: 40
  • Holiday hours: 8 (straight time)
  • Overtime hours worked: 1 (time-and-a-half)

For more information on overtime and the FLSA, check out these articles on our blog: Is There a Maximum Amount of Overtime My Employees Can Work in a Week? Is there a special way of calculating overtime for an inside sales full-time salaried, non-exempt employee?

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

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