Overtime
Unless exempt from the overtime provisions, an employee must be paid at a rate of one and one-half their regular (hourly) rate for all hours worked over 40 per week. Employees who perform different types of work for which they receive varying rates of pay must be paid overtime at a weighted average hourly rate. Click here to check out our YouTube video regarding Overtime Compensation and Weighted Average Overtime.
Overtime Calculator Spreadsheet
This spreadsheet is a tool you can download to assist in calculating weighted average overtime; it contains embedded calculations which, if altered, will populate incorrect results. The responsibility to properly pay employees solely rests with the business. The Montana Department of Labor and Industry highly recommends users verify results.
Calculating Overtime Manually
To calculate weighted average overtime, complete the following steps:
- Calculate the sum of all regular earnings by calculating hours worked for each pay rate.
- Determine the average rate by dividing the sum of all earnings by hours worked.
- Divide the average rate by 2 to determine the half-time rate.
- Multiply the half-time rate by the number of overtime hours worked to determine overtime earnings.
- Finally, add overtime earnings to regular earnings to determine total pay due.
EXAMPLE: One week an employee works 36 hours entering data into the computer data base for which $10.25 per hour is paid. The employee then spends 6 hours preparing payroll for which $13.50 per hour is paid. This same worker performs janitorial services in the evenings for the employer and is paid $9.60 per hour for those 4 hours worked per week. The wages are computed as follows:
36 hours x $10.25 per hour = $369.00
6 hours x $13.50 per hour = $ 81.00
4 hours x $9.60 per hour = $ 38.40
46 hours worked = $488.40 regular earnings
$488.40 ÷ 46 hours = regular rate = $10.62 per hour
$10.62 ÷ 2 = ½ time rate = $5.31 per hour
$5.31 x 6 overtime hours = $31.86 overtime earnings
$488.40
$31.86
$520.26 total due
- The regular rate of an employee paid on a commission, piece rate, or flat book rate basis is arrived at by dividing the total weekly earnings by the total number of hours actually worked in the week. The employee is entitled to payment of one-half this regular rate for each hour worked over 40 - in addition to the full commission or piecework earnings.
EXAMPLE: Ann works 45½ hours and earns $432.25. Her regular rate is $9.50 per hour ($432.25 divided by 45½ hours). She is entitled to her regular earnings ($432.25) plus an additional half of her regular rate of $4.75 for each hour worked over 40. In this case, she is due an additional $26.13 or a total of $458.38 for that workweek.
- An employee paid on a salary basis is entitled to overtime pay at a rate that is based in part on the terms of employment.
Holiday pay, sick leave, and vacation hours do not count toward the 40 working hours required for overtime pay.
