Calculate Regular Rate of Pay First

• 1). Gather your employee's time sheets, pay and productivity documents. Write down the amount of pay the employee earned in a week as shown on the payroll records. Any production bonuses or paid waiting time must be included. Divide that by the number of hours the employee worked in that week. The result is the employee's regular rate of pay. Ensure that it is not less than the federal minimum wage, $7.25 in 2010, or less than the state minimum wage, if it is higher. This method is used for commission based or piece-rate employees, as well as for other incentive-based jobs.
  
  
• 2). Take the regular rate of pay and divide it in half. This is your overtime rate of one-half. Take the number of hours of overtime that were worked and multiply it by the overtime rate. This is how much was made in overtime. Add that number to the amount of regular pay earned, which is calculated by multiplying the regular rate of pay by the hours of straight time worked. The result is the employee's weekly pay plus overtime.
  
  
• 3). Use the production sheet to determine how many pieces of product were produced by your piece-rate employee, if the calculation above resulted in less than the minimum wage. Separate the record of the pieces produced during regular time from the record of the pieces produced during overtime. Multiply the number of pieces produced during regular time by the number of regular hours worked to ensure you are paying minimum wage. Divide the amount you pay per piece by 2, then add the result to the regular piece rate. This is your overtime rate. It is one-and-one-half times the regular piece rate. Multiply this rate by the number of overtime hours. Add the result to the number of straight time hours and you have the pay for the week with overtime. This method must be agreed to prior to performing the work.