Definition
The regular rate of pay is the hourly rate used to calculate overtime under the Fair Labor Standards Act. It includes all job-related compensation except specific statutory exclusions and is found by dividing total weekly earnings by actual hours worked. Overtime is owed at no less than one and one-half times this rate.
Also known as: regular rate, FLSA regular rate
How it works
Under the FLSA, covered nonexempt employees generally must receive overtime for hours worked beyond 40 in a workweek, at a rate not less than time and one-half their regular rates of pay. The regular rate is not simply the base hourly wage. It encompasses all job-related compensation except the exclusions the statute lists.
To calculate it, divide total weekly earnings that count toward the rate by the actual hours worked. When an employee performs different types of work at different rates in one week, overtime is calculated using the weighted average of those rates.
Overtime cannot be waived by agreement, and hours cannot be averaged across weeks. Payroll systems should therefore capture all earning types, so that overtime is computed on the correct rate each pay period.
Example
A nonexempt technician earns a set hourly wage and receives a job-related bonus in a week with 45 hours worked. Payroll adds the bonus to the week's earnings, divides by 45 to find the regular rate, and pays the overtime hours at one and one-half times that rate.
How it differs from similar terms
Regular Rate of Pay vs Off-Cycle Payroll. The regular rate determines how much overtime is owed, while off-cycle payroll is a timing mechanism for paying corrections outside the normal schedule, such as when the rate was miscalculated.
Software that handles it
- Payroll Software
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- Time & Attendance Software
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Related terms and guides
Frequently asked questions
How is the regular rate of pay calculated?
Divide the total weekly earnings that count toward the regular rate by the actual hours worked in that week. The result is the regular rate, which includes all job-related compensation except specific statutory exclusions. Overtime hours are then paid at no less than one and one-half times that figure.
Is the regular rate the same as the hourly wage?
Not necessarily. The regular rate includes all job-related compensation except the exclusions in the statute, so items beyond the base hourly wage can raise it. If an employee works multiple jobs at different rates in one week, overtime uses the weighted average.
Can overtime be averaged over two weeks?
No. Overtime is determined by workweek, and hours cannot be averaged across multiple weeks to reduce overtime obligations. Employees also cannot waive overtime protections by agreement, even if the employer has a policy against unauthorized overtime. Payroll should evaluate each workweek on its own when calculating overtime.