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Determining overtime based on hourly and commission salaries

Employees in California might occasionally be confused about the basis upon which overtime is given and how they become eligible to receive it. For example, there is a difference between workers who are given a set amount per hour, those who receive a salary, and workers who are considered “piece” workers or are paid via commission. Understanding this is imperative when there is the possibility that an employer is violating employee rights when it comes to the wage laws of the state.

Those who are paid hourly will have that amount viewed as their regular rate of pay, period. Those who receive a salary can calculate what they receive by using mathematical formulas. The amount received per month should be multiplied by 12 — the number of months in a year — to determine what the annual salary is. That should be divided by 52 — the number of weeks in a year — to come to a determination as to how much is earned per week. That total will be divided by the number of maximum regular hours an employee can work per week before overtime must be paid — 40 hours — and that will be the regular rate earned per hour.

For people who are paid via piece or commission, there are different ways in which the rate of pay is determined. This will affect how overtime is calculated. The regular rate will be the piece or commission rate. Those who work overtime will receive “time-and-a-half” for the first four hours of overtime during the regular workweek. What this means is the amount that is paid per hour will be paid with half that amount added to it. Those who work beyond twelve hours will receive double-time, meaning their hourly salary will be doubled.

Piece workers can receive a “group rate” as long as the regular rate does not fall below the state’s minimum wage. Those who are being paid based on hourly wages, a salary, piece or commission might be confused as to how their status is categorized. That could lead to a misunderstanding of how they are supposed to be paid based on the wage and hour law. If there is a belief that the law is being violated or simple misunderstandings as to what should be paid, speaking to a legal professional about it can help in getting what is owed through a legal filing.

Source: dir.ca.gov, “Overtime,” accessed on Mar. 8, 2016


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