How to Calculate Payroll for Overtime
Calculating overtime is an essential task when determining compensation for employees. Overtime must be paid by law to certain employees who work more than forty hours per week in the United States. Overtime pay usually only applies to non-exempt workers, that is, workers who are not exempt from regulations set forth in the Fair Labor Standards Act.
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Instructions
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Calculate Hours Worked
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First, calculate the total number of hours an employee worked. If that total is less than forty hours, multiply that number by the hourly rate of pay and you will have arrived at the weekly pay. If that total is more than forty hours, continue to step 2.
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2
Next, subtract forty from the total number of hours to calculate the number of overtime hours. These hours are paid at the overtime rate, which is usually 1.5 times the normal hourly rate. Multiple the number of overtime hours worked by the overtime rate to arrive at overtime pay.
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3
To calculate total weekly pay, add regular pay and overtime pay.
Example
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Germaine is a non-exempt employee. She worked 50 hours this week, and she makes $10 per hour.
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Her base pay will be 40 x $10 = $400.
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Germaine worked 10 hours over 40 hours, so she worked 10 overtime hours. If overtime pay is 1.5 times regular pay, her overtime rate is $15 per hour. Therefore, her overtime pay is 10 x $15 = $150.
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To compute her total pay, add the base pay and the overtime pay: $400 + $150 = $550.
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