Understanding and Calculating Regular Rate

Report
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!

similar documents