7.2

Pay structures

Hourly, piece-rate, day-rate, and salaried pay compared

Chapter 1 established that overtime is paid at one and one-half times the “regular rate,” and that the regular rate is a rate per hour — not whatever figure appears on the pay stub. How that hourly figure is derived depends entirely on how the employee is paid, and the source text sets out four common structures, each with its own arithmetic. An hourly rate employee already has a regular rate on its face. A pieceworker, a day-rate or job-rate employee, and a salaried employee do not — their regular rate has to be built each workweek from what they actually earned and how many hours they actually worked.

The four structures share one method underneath their differences: total the straight-time compensation — pay at the regular hourly rate for hours worked, not counting the overtime premium — that the pay structure produced for the workweek, then divide by the total hours worked in that workweek. For the hourly employee this step needs no division at all, because the hourly rate already is the regular rate — unless a bonus is added, which triggers the same divide-through calculation as the other three: divide total earnings by total hours worked.

For the pieceworker, the total is piece-rate earnings plus any other pay such as waiting time (see Chapter 6), divided by hours worked to find the regular rate. However, in a week with no waiting time or other differently-paid hours, where the week's total piece-rate earnings fall short of what a minimum hourly guaranty — a guaranteed minimum hourly rate — would pay for the hours worked, that guaranty becomes the regular rate for the week outright (§ 778.111(b)). Where piece-rate earnings for the week meet or exceed that amount, the regular rate remains the ordinary pieceworker computation: total earnings divided by hours worked. Where waiting time or another differently-paid rate is involved in that week, the regular rate is instead the weighted average of the two rates (a blended rate proportional to the hours worked at each rate), per § 778.115.

For the day-rate or job-rate employee, the total is only the day-rate or job-rate sums themselves — this same total-and-divide method applies, but only when the employee receives no other form of compensation for services. A day-rate or job-rate employee who also receives other compensation, such as waiting time pay or a bonus, falls outside that restricted case, and the regular rate is instead built the same way as the pieceworker's: total all remuneration — the day-rate or job-rate sums plus the other pay — and divide by the total hours worked in the workweek.

For the salaried employee, the starting point is the salary itself, translated to a weekly figure first if it is paid monthly or semimonthly — multiply a monthly salary by 12 and divide by 52, or a semimonthly salary by 24 and divide by 52 — then divided by the number of hours the salary is intended to cover. Once the regular rate is found for each employee, the overtime premium follows the identical pattern across all four: every hour worked, including hours over 40, is paid at the regular rate, and each hour over 40 also earns an added half of the regular rate on top, for a combined one and one-half times the regular rate on overtime hours — the hourly-rate case is no exception, since the hourly rate itself already supplies the straight-time pay for those hours.

Hourly rate

The stated hourly rate is the regular rate outright. Overtime hours are paid at one and one-half times that rate — unless a bonus is added, which requires dividing total earnings (hourly pay plus bonus) by total hours worked to find a new regular rate before adding half of the regular rate as the overtime premium.

Piece rate

Total earnings for the workweek — piece-rate pay plus any other pay such as waiting time (see Chapter 6) — are divided by total hours worked to yield the regular rate. Only the extra half of the regular rate is then owed on overtime hours, since straight-time pay for all hours is already included in that total. However, in a week with no waiting time or other differently-paid hours, where the week's piece-rate earnings fall short of what a minimum hourly guaranty would pay for the hours worked, that guaranty becomes the regular rate for the week (§ 778.111(b)). Where piece-rate earnings meet or exceed that amount, the regular rate remains total earnings divided by hours worked. Where waiting time or another differently-paid rate was worked that week, the regular rate is instead the weighted average of the two rates (a blended rate proportional to the hours worked at each rate), per § 778.115.

Day rate or job rate

A flat sum paid per day or per job, without regard to hours worked and with no other form of pay, is totaled for the workweek and divided by the hours actually worked to find the regular rate. An added half of the regular rate is then owed for hours over 40. If a day-rate or job-rate employee also receives other compensation, such as waiting time pay or a bonus, total all compensation and divide by the hours actually worked in the workweek — the same method used for pieceworkers.

Salaried

A weekly salary is divided by the number of hours it is intended to compensate to find the regular rate. A salary paid monthly or semimonthly must first be converted to its weekly equivalent — multiplying by 12 and dividing by 52 for a monthly salary, or by 24 and dividing by 52 for a semimonthly one — before that division is made. Overtime hours are then paid at straight time plus an added half of the resulting regular rate.

Key terms

regular ratepiece rateday ratejob rateminimum hourly guarantyweekly salary equivalent