Many employees are shocked to learn that their overtime pay may have been shorted. Under the Fair Labor Standards Act (FLSA), non-exempt employees are entitled to overtime compensation at 1.5 times their “regular rate of pay” for all hours worked over 40 in a workweek. But what exactly is the regular rate? That’s where many employers get it wrong—and where a wage and hour attorney can make a real impact. “Regular rate of pay” does not always mean your base hourly rate. It can be much more.
What Counts Toward the Regular Rate?
The “regular rate” for overtime purposes must include all compensation, not just base hourly wages. This means many additional forms of pay must be factored in when calculating overtime:
- Shift Differentials: Extra pay for working nights, weekends, or holidays must be factored into the regular rate.
- Nondiscretionary Bonuses: Performance bonuses, attendance incentives, and safety awards are part of the regular rate — even if paid later.
- Commissions: Sales-based commissions must be allocated across applicable workweeks and included in the overtime rate.
- On-Call Pay & Piece Rates: These, too, must be factored in when determining overtime obligations.
As an example, consider this scenario. Jane is paid a base hourly rate of $10.00. She also earns commissions. During one workweek, Jane works 50 hours and earns $400.00 in commissions; therefore, her total earnings for the work week are $900.00. (50 hours x $10.00 + $400.00). To determine her regular rate of pay for overtime purposes, the employer must divide her total workweek pay ($900.00) by her total hours worked (50 hours). Thus, her “regular rate of pay” for overtime purposes is $18.00 an hour. Her overtime premium for the workweek would be $9.00. This is significantly more than the $5.00 premium she would have earned if using only her base hourly rate of $10.00. Jane may be entitled to recover $4.00 for every hour she worked for up to three years, plus liquidated damages in an equal amount. Her employer would also have to pay her attorney’s fees and expenses.
Common Violations
Many employers mistakenly (or intentionally) calculate overtime based only on the employee’s hourly base rate. That’s a direct violation of FLSA requirements and can entitle employees to:
- Back pay for unpaid overtime
- Liquidated damages (equal to the unpaid wages)
- Attorney’s fees and costs
Recent Cases & Developments
Bohrer Brady, LLC was recently able to secure a settlement with Mobilelink and its affiliated companies regarding calculations of regular rates of pay. Mobilelink, a private Cricket Wireless company, paid its sales personnel an hourly rate plus commissions. According to the plaintiffs, Mobilelink paid its sales personnel overtime based on the wrong regular rates of pay. In most cases, Mobilelink paid overtime based on the employees’ base hourly rates with no consideration of earned commissions. Due to Bohrer Brady, LLC’s efforts, Mobilelink agreed to recalculate the employees’ regular rates of pay, including the earned commissions, and back pay all unpaid overtime wages, plus an equal amount in liquidated damages. Mobilelink also agreed to pay service awards to the named Plaintiff and separately pay attorneys’ fees and costs. Alvarez, et al. v. MFK, LLC d/b/a Mobilelink, et al., Civil Action No. 4:21-cv-02058, pending in the United States District Court for the Southern District of Texas.
In Landry v. West Ascension Parish Hosp. Serv. Dist. d/b/a Prevost Hosp., No. 3:20-cv-00541 (M.D. La.), the attorneys at Bohrer Brady, LLC were able to obtain a $1,050,000 settlement, which included the back pay of unpaid overtime wages caused by regular rate violations. Among other things, the employer failed to include shift differential when calculating overtime wages for nurses and CNAs.
Need Help with a Regular Rate Claim?
Our firm actively investigates and litigates FLSA violations involving regular rate miscalculations. If you have been paid overtime based only on your base rate, you may have a claim for unpaid overtime, liquidated damages, attorneys’ and costs if you also earn commissions, shift differential pay, or non-discretionary bonuses such as production, attendance, and shift bonuses.
