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Slide 1 FastFacts Feature Presentation April 24, 2012 To dial in, use this phone number and participant code… Phone number: 888-651-5908 Participant code: 182500 To participate via VoIP… You must have a sound card You must have headphones or computer speakers © 2012 The Johns Hopkins University. All rights reserved. Slide 2 Today’s Topic We’ll be taking a look at… Understanding and Calculating Regular Rate Slide 3 Today’s Presenter Sue O’Hare Sr. Compensation Analyst Slide 4 Session Segments Presentation Sue will define “regular rate” and explain how to calculate it. During Sue’s presentation, your phone will be muted. Q&A After the presentation, we’ll hold a Q&A session. We’ll open up the phone lines, and you’ll be able to ask questions. Sue will answer as many of your questions as time allows. Slide 5 Contact Us If you would like to submit a question during the presentation or if you’re having technical difficulties, you can email us at: [email protected] You can also send us an instant message! GoogleTalk – [email protected] AOL Instant Messenger – HopkinsFastFacts MSN – [email protected] Slide 6 Survey Survey At the end of this FastFacts session, we’ll ask you to complete a short survey. Your honest comments will help us to enhance and improve future FastFacts sessions. Slide 7 How To View Full Screen Slide 8 Understanding and Calculating Regular Rate Slide 9 FastFacts Series on Compensation Topics Four FastFacts Sessions Last month we discussed “Hours Worked & Time Off Plans” Summary: Compensable work time under Fair Labor Standards Act Required to pay non-exempt employees for all time worked Understanding what constitutes hours worked: Wait time, on call time, meal & rest periods, sleep time, travel time, lectures, meetings, training, preliminary and postliminary activities Time Off Plan – Allows time off during the same pay period in which the employee worked in excess of the standard work week Slide 10 FastFacts Series on Compensation Topics 1. Hours Worked & Time Off Plans 2. Understanding and Calculating Regular Rate 3. Tracking Time in E210 & Processing Overtime in SAP – May 10, 2012 4. Tracking, Calculating & Processing Overtime Scenarios – June 7, 2012 Slide 11 Relevant JHU Terms Standard/Base Hourly Rate The standard or base hourly rate is the straight time rate of pay (or straight pay) per hour, exclusive of any shift, overtime, or other premium pay. Regular Rate The regular rate is defined as the hourly equivalent of all total earnings minus statutory exclusions. Premium Rate The premium rate is a rate not less than one and one half times the employee’s regular rate of pay, for hours worked in excess of 40 in a workweek. Slide 12 Relevant Formulas Total Standard/Base Pay = standard/base hourly rate x total hours worked Total Earnings (minus exclusions) = total standard/base pay + inclusions Regular Rate = total earnings (minus exclusions) total number of hours worked Overtime Premium = regular rate x 1.5 Overtime Pay = overtime premium x overtime hours Holiday Premium = regular rate x 1.5 Holiday Pay = holiday premium x holiday hours Total Weekly Pay = total earnings (minus exclusions) + overtime pay (+ holiday pay) Slide 13 Understanding Regular Rate What is it and why is it important? Key concept – Rate used to calculate overtime Non-exempt employees must be paid at a rate of one and onehalf times the regular rate of pay for hours worked in excess of 40 hours per week. Generally, regular rate includes all payments made to or on behalf of employees (except for certain statutory exclusions discussed next). Slide 14 What’s Included in Calculating the Regular Rate? Regular rate includes: All hourly wages Shift differentials On-call pay Employer-paid lunch or meals if not incurred on the employer’s behalf or for employer’s benefit Bonuses promised for quantity and quality of work (e.g., incentive, sales commission, good attendance) Slide 15 What’s Not Included in Calculating the Regular Rate? Examples of “statutory exclusions” include: Payments for time not worked Discretionary bonuses Other premium payments Reimbursement for business expenses, e.g., tolls Amounts paid as gifts, not based on hours worked, production, or efficiency Employer-paid benefits Slide 16 How Is Regular Rate Calculated? The Fair Labor Standards Act (FLSA) formula for determining the regular rate is: total earnings (minus exclusions) total number of hours worked Slide 17 Regular Rate – Without Additional Pay A straight-forward example without additional pay involved: Joanne, a non-exempt employee, is paid $400.00 per week for a normal 40 hour work week. Her standard base/hourly rate is $10.00 per hour. The formula for determining the regular rate is: total earnings (minus exclusions) total number of hours worked Regular rate = $400.00 total earnings ÷ 40 hours worked = $10.00/hour Slide 18 Regular Rate – Overtime & No Additional Pay Joanne’s supervisor asked her to work 5 hours overtime to meet an important deadline. Joanne is a non-exempt employee whose standard work schedule is 40 hours a week. Her standard/base hourly rate is $10.00/hr. Total hours worked (40 reg. hours + 5 OT hours) Standard/base hourly rate Total standard base pay ($10.00/hr x 45) = 45 hours = $10.00/hr = $450.00 Total earnings (minus exclusions) = total standard base pay + inclusions = $450.00 total standard base pay + $0 inclusions = $450.00 Regular rate = total earnings (minus exclusions) total number of hours worked = $450.00 ÷ 45 hours = $10.00/hr Overtime pay ($10.00/hr regular rate x 0.5 x 5 OT hours) = $ 25.00 Total Weekly pay ($450.00 total earnings + $25.00 OT pay) = $475.00 Slide 19 Regular Rate with Other Pay In next few slides, we’ll go over examples where the employee receives “other” pay Other pay makes the calculation of regular rate a little bit more complicated Other pay includes on-call pay, shift differential pay, premium pay, and bonuses As a reminder, the Fair Labor Standards Act (FLSA) formula for determining the regular rate is: total earnings (minus exclusions) total number of hours worked Slide 20 Regular Rate and Other Pay (On Call) On-call pay is included as part of “regular rate” and is considered in calculating overtime. Assume non-exempt employee; 40 hour standard work schedule. Total hours worked = 48 hours Standard/base rate = $14.50/hr Total standard/base pay ($14.50/hr x 48 hrs) = $696.00 Total on-call hours On-call rate Total on-call pay ($4.50/hr x16 hrs) = 16 hours = $4.50/hr = $72.00 Total earnings (minus exclusions) = total standard base pay + inclusions = $696.00 total standard base pay + $72.00 on-call pay = $768.00 Regular rate = total earnings (minus exclusions) total number of hours worked = $768.00 48 hours = $16.00/hr Overtime pay ($16.00/hr regular rate x 0.5 x 8 OT hours) Total Weekly pay ($768.00 total earnings + $64.00 overtime pay) = $ 64.00 = $832.00 Slide 21 Regular Rate and Other Pay (Shift Differential) Shift differentials are included as part of “regular rate” and are considered in calculating overtime. Assume non-exempt employee, 40 hour standard work schedule. Employee works a total of 42 hours during the evening shift. Total hours worked = 42 hours Standard/base rate = $14.50/hr Total standard base pay ($14.50/hr x 42 hrs) = $609.00 Total shift differential hours = 42 hours Shift differential rate = $3.50/hr Total shift differential pay ($3.50/hr x 42 hrs) = $147.00 Total earnings (minus exclusions) = total standard base pay + inclusions = $609.00 total standard base pay + $147.00 shift diff pay = $756.00 Regular rate = total earnings (minus exclusions) total number of hours worked = $756.00 42 hours = $18.00/hr Overtime pay ($18.00/hr regular rate x 0.5 x 2 OT hrs) = $18.00 Total Weekly pay ($756.00 total earnings + $18.00 overtime pay ) = $774.00 Slide 22 Regular Rate with Holiday Pay Frank is a non-exempt employee who works a 37.5 standard work schedule. He is asked to work on a holiday that falls within his normal work week. He is paid at the rate of one and one-half times his hourly rate for working the holiday. Unlike On-call and Shift Differential pay, Holiday pay is NOT included in the calculation of an employee’s regular rate. Total hours worked Standard/base hourly rate Total standard base pay ($20.00/hr x 37.5 hours) = 37.5 hours = $20.00/hr = $750.00 Total earnings (minus exclusions) = total standard base pay + inclusions = $750.00 total standard base pay + $0 inclusions = $750.00 Regular Rate = total earnings (minus exclusions) total number of hours worked = $750.00 37.5 hours = $20.00/hr Holiday pay ($20.00 /hr regular rate x 1.5 x 7.5 hrs holiday hours worked) = $225.00 Total Weekly pay ($750.00 total earnings + $225.00 holiday pay) = $975.00 Slide 23 Regular Rate – Two Standard/Base Rates (Weighted Average) Mary, a part time, non-exempt employee performs two different types of work at two different standard/base hourly rates. Admissions Aide: Hourly Rate $11.25 Office Assistant: Hourly Rate $14.50 Hours Worked Hours Worked 21 26 Total Hours Worked = 21 + 26 = 47 (7 hours premium overtime) Admissions Aide: 21 hours x $11.25 Office Assistant: 26 hours x $14.50 Total standard base pay = $236.25 = $377.00 = $613.25 Total earnings (minus exclusions) = total standard base pay + inclusions = $613.25 total standard base pay + $0 inclusions = $ 613.25 Regular rate = total earnings (minus exclusions) total number of hours worked = $613.25 47 hours = $13.05/hr Overtime pay ($13.05/hr regular rate X 0.5 x 7 OT hours) = $45.71 Total Weekly pay ($613.25 total earnings + $45.71 overtime pay) = $658.96 Slide 24 Rate-In-Effect: Alternate Method for Calculating Overtime Rate-in-Effect method: Overtime pay is calculated based on the standard/base hourly rate that is in effect when overtime is worked All the following conditions must be met: Employee works multiple jobs that are identifiably different & that are different types of work Employee has agreed to be paid at different rates There’s a written agreement between the employee and the department before work is performed Consult with HR and obtain approval prior to using Rate-in-Effect Slide 25 Summary Here’s a list of all the terms that we covered in today’s presentation: Total Standard/Base Pay Total Straight Pay (or straight pay) Regular Rate Overtime Premium Overtime Pay Holiday Premium Holiday Pay Rate-in-Effect Total Weekly Pay Formulas are provided in the job aid included with this presentation Slide 26 Summary In summary: Regular rate is the basis for calculating OT pay. Regular rate is not always the same as an employee’s standard/base hourly rate. Pay received for other things may need to be included in calculating an employee’s regular rate. To ensure correct payment of OT, you must: Know what constitutes Hours Worked & count them correctly Know how to calculate an employee’s regular rate Slide 27 Upcoming FastFacts Please mark your calendars and remember to join us for these future FastFacts, when we’ll cover these topics: Tracking Time in E210 & Processing Overtime in SAP – May 10, 2012 Tracking, Calculating & Processing Overtime Scenarios – June 7, 2012 Slide 28 Q&A We’re going to open the phone lines now! There will be a slight pause, and then a recorded voice will provide instructions on how to ask questions over this conference call line. We’ll be answering questions in the order that we receive them. We’ll also be answering the questions that were emailed to us during the presentation. If there’s a question that we can’t answer, we’ll do some research after this session, and then email the answer to all participants. Slide 29 Thank You! Thank you for participating! We would love to hear from you. Are there certain topics that you would like us to cover in future FastFacts sessions? Would you like to be a FastFacts presenter? Please email us at: [email protected] Slide 30 Survey Before we close, please take the time to complete a short survey. Your feedback will help us as we plan future FastFacts sessions. Click this link to access the survey… http://connect.johnshopkins.edu/fastfactssurvey/ Thanks again!