In order to determine how to properly calculate overtime payments under the federal Fair Labor Standards Act (FLSA), an employer must first calculate the “regular rate” on which overtime is based. The calculation of the regular rate is, in theory, a straightforward exercise that converts an employee’s pay into its hourly rate equivalent. However, common employer pay practices often make the determination considerably more challenging.
A number of recent court cases show how calculating the regular rate is in fact a complex issue in many instances. These cases further show that mistakes can be costly, and that even after decades of FLSA case law there are still some issues subject to interpretation.
In light of these complexities, we have prepared an introduction to the regular rate. We included highlights of recent litigation and settlements, which demonstrate how miscalculations can be costly.
Please note that this guide is designed to be informational only, and is not intended to convey legal advice. Counsel should be consulted anytime an issue arises with respect to regular rate determinations.
Members of the Center for Workplace Compliance (CWC) can read more here.