14 Nov How does overtime pay change for different employees?
Whether you are a salaried or hourly employee, you are probably familiar with working overtime. It is likely there have been weeks where you are needed more than others, and you must push yourself to work longer than anticipated. There may also have been instances where you only work overtime for the potential increase in compensation you look forward to receiving on payday. But how do you know how much money you are owed?
Overtime pay is commonly known as the phrase “time and a half”. That means that the employee will receive 1.5 times their usual rate of pay. According to the Employment Standards Act 2000 (ESA), if an employee works more than 44 hours in the week, they are eligible to receive 1.5 times their pay for any additional hours they worked.
As stated previously, both hourly and salaried employees can be eligible for overtime pay. However, how they are compensated for their extra hours works a bit differently.
Hourly Employees
Hourly employees are paid by the hour, so their overtime pay is calculated reflecting that. For every additional hour worked, an hourly employee will receive their regular hourly pay times 1.5 for each overtime hour. For example, if the employee is paid 25 dollars an hour and worked overtime for 5 hours that week, his pay would be calculated as: {$25 x (1.5)} x 5 = $187.5. So, the $187.5 would be added to their regular pay for that week.
If you are an hourly employee who also makes commission, that commission number is added to your total hourly rate for that week, divided by 44 hours worked. This number would then be used to calculate the overtime pay rate like above but with commission included. You would then subtract that number with the overtime pay not including commission to get the total amount the employee is owed. For example, if the employee makes $20 an hour, $880 per week, had a commission of $150, and worked 5 hours overtime, this is what it would look like numerically:
- Overtime with commission ($880 + $150) / 44 = $23.41 x 1.5 = $35.12 x 5 = $175.60
- Overtime with regular wages $20 x 5 = $100.00
- Subtract $175.60 with $100.00 = overtime pay owed of $75.60.
Salaried Employees
Even though employees paid on a salary basis have fixed incomes, there are still many instances where these employees would qualify for overtime work. Their overtime pay is calculated with their fixed weekly payments. For example, if an employee receives $500 each week and they worked 10 hours overtime, their pay would be calculated like: (($500/44) x (1.5)) x 10 = $170.45. Just like the hourly employee, this amount would then be added to their regular payment for the 44-hour work week.
If your pay changes weekly, where you agree to the hours of work and the pay on a weekly basis, this employee must still work over 44 hours a week to be considered for overtime pay. The overtime pay would still be calculated the same, except the hourly pay would be calculated with the agreed hours of work and not 44 hours. For example, if the employee agreed to 42 hours for $750 in pay that week, instead of dividing $750 by 44, you would divide by 42.
If you have not been paid by your employer or believe you may be owed overtime compensation and seek legal counsel, please contact KCY at LAW by filling in an online consultation request or contact us by phone at 905-639-0999 to book your consultation today.
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What are the differences between an hourly employee and a salaried employee?
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Ontario Employees’ rights to time off from work