Premier Flooring Retailer | D3 | 2024

3. What Is Regular Rate Of Pay? The amount of overtime pay due to an employee is based on the employee’s regular rate of pay and the number of hours worked in a workweek. In many cases, the regular rate of pay is an employee’s hourly rate. But some employees are paid a salary, commission, or some other basis. In these cases the overtime pay due must be computed on the basis of the average hourly rate derived from such earnings. For example, if an employee has an annual salary of $31,200, his weekly salary is $600 ($31,200 ÷ 52 weeks=$600). The employees hourly rate would be $15.00, his weekly salary divided by 40 hours. The calculations do not necessarily end with the hourly rate. Nondiscretionary bonuses must be included in determining an employee’s regular rate of pay, whether paid an hourly rate or a salary. Nondiscretionary bonuses include those that are announced to employees to encourage them to work more steadily, rapidly or efficiently, and bonuses designed to encourage employees to remain with a facility. The bonuses could be for meeting certain sales goals, safety goals such as injury free work days, attendance, and similar pre-announced incentives. When the bonus is paid during the pay period in which it is earned, the calculation is straight forward as set forth above. But what if the bonus is paid less frequently, such as quarterly or annually? Until the bonus is paid, the employer does not need to take the bonus into consideration in calculating the regular rate of an employee’s overtime. Once the amount of the bonus is determined, however, it must be apportioned back over the work weeks during which it was earned. The overtime for those weeks must be recalculated using the regular rate that includes the allocated bonus. Consider for example an annual nondiscretionary bonus of $1,300. Allocated over 52 weeks would add $25.00 week to the employees pay ($1,300 ÷ 52 weeks=$25). Using the earlier weekly salary of $600, the new weekly salary would be 6 $625 with a new hourly rate of $15.63. For more information check out: “Calculating Overtime— Did You Include Bonuses?,” Premier Flooring Dealer (2nd Quarter 2019) (Regular Rate.com).

4. Are Salary Employees Exempt? Paying an employee a salary, does not automatically exempt them from overtime. As explained below, whether a flooring retailer must pay overtime depends on what the employee does, not just how the retailer chooses to pay them. 5. What Managers and Administrators Are Exempt? To fall within exemptions for managers and administrators, an employee must meet a three part test: 1. Be paid a predetermined and fixed salary that is not subject to reduction for variations in the quality or quantity of work performed (the “salary basis test”) 2. Be paid at least the minimum salary level (the “minimum salary test”); and 3. Primarily perform executive, administrative or professional duties (the “duties test”). The minimum salary required for the EAP exemptions from overtime is $844 per week ($43,888 per year). Nondiscretionary bonuses, incentive payments and commissions can be used to satisfy up to 10 percent of the minimum salary requirement ($84.40 per week), as long as these forms of compensation are paid at least annually. As of January 1, 2025, the minimum salary required for managers and administrators exemption is scheduled to increase to $1,128 per week ($58,656 per year). Under the duties test, management employees must have a primary duty of managing the enterprise or a department or subdivision of the enterprise; must customarily and regularly direct the work of at least two employees; and must have the authority to hire or fire, or their suggestions and recommendations as to the hiring, firing, or changing the status of other employees must be given particular weight. For the Administrative exemption, employees must have a primary duty of performing office or nonmanual work directly related to the management or general business operations of the employer or the employer’s customers, and their primary duty must include the exercise of discretion and independent judgment with respect to matters of significance. For more information check out: “Management and Administrative Overtime Rule A Practical Guide” WFCA

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