Overtime Straight Time and Premium Rates
Overtime is time worked that exceeds the hours of a full-time non-exempt employee's regular daily schedule on pay status or exceeds 40 hours on pay status in a workweek. Employees shall be compensated at the straight-time rate for hours of overtime not exceeding 40 hours of actual work in a workweek, and shall be compensated at the premium rate of 1-1/2 times the regular rate of pay (see Definitions) for hours worked which exceed 40 hours of actual work in a workweek, not simply hours on pay status in a workweek.
Pay status includes time worked and paid leave such as sick leave, vacation leave, holidays, military leave, compensatory time off, and administrative leave with pay.
Overtime shall be assigned by the department head to meet essential operating needs. Overtime by non-exempt employees must be approved in advance, but if worked it must be compensated, whether approved or not. An employee is expected to seek advance approval for overtime work and to report overtime worked at the time of reporting other hours worked in a work-reporting period.
Definitions of Overtime
Compensatory Time Off
An overtime agreement allowing certain non-exempt employees to voluntarily select overtime compensation in the form of time off in lieu of compensation. Time off is provided at the premium rate of time-and-a-half. CTO eligibility is dependent upon bargaining unit agreement and the discretion of management.
Exempt Employee
Exempt employees are defined as employees who, based on duties performed and manner of compensation, shall be exempt from the Fair Labor Standards Act (FLSA) minimum wage and overtime provisions. Because of hourly pay practices, an employee appointed to a per diem position in an exempt title shall be treated as a non-exempt employee subject to FLSA minimum wage and overtime provisions.
Exempt employees shall be paid an established monthly or annual salary and are expected to fulfill the duties of their positions regardless of hours worked. Exempt employees are not eligible to receive overtime compensation or compensatory time off, and are not required to adhere to strict time, record keeping, and attendance rules for pay purposes. Exempt titles are identified in University wide title and pay plans.
Non-Exempt Employee
Non-exempt employees are defined as employees who, based on duties performed and manner of compensation, shall be subject to all FLSA provisions. Because of hourly pay practices, an employee appointed to a per diem position shall be treated as a non-exempt employee subject to FLSA minimum wage and overtime provisions.
Non-exempt employees shall be required to account for time worked on an hourly and fractional hourly basis and are to be compensated for qualified overtime hours at the premium (time-and-one-half) rate. Non-exempt titles are identified in title and pay plans.
Regular Overtime
According to specific bargaining unit contracts, this rate of pay is equal to the employee’s regular rate of pay. This pay rate is usually applied when workweeks are less than 40 hours.
Regular Rate of Pay
The regular rate of pay applicable to non-exempt employees only is specifically defined in the provisions of the Fair Labor Standards Act and is integral to the formula used to calculate premium overtime pay. The regular rate of pay is derived by dividing the total remuneration in a workweek (excluding pay for sick leave, vacation leave, holidays, premium overtime, and other types of non-productive pay) by the total number of hours actually worked in that workweek. The regular rate of pay is an hourly rate, either actual or derived.
Compensatory Time Off
CTO agreements allow certain non-exempt employees to voluntarily select overtime compensation in the form of time off in lieu of compensation. CTO eligibility is dependent upon the bargaining unit agreement and the discretion of management. CTO agreement forms are used to indicate a non-exempt employee’s selection of overtime compensation in the form of pay or compensatory time off.
|
Classification |
Required |
Classification |
Required |
|
99 – Non-represented Employees |
Required |
NX – Nurses |
Optional |
|
CX – Clerical and Allied Services |
Optional |
PA – Police |
Required |
|
EX – Patient Technical Care |
No CTO Form |
RX – Research Support Professionals |
Optional |
|
HX – Health Care Professionals |
Optional |
SX – Service |
Optional |
|
K5 – Skilled Crafts |
Optional |
TX – Technical |
Optional |
These agreement forms are used to indicate whether overtime will be compensated in the form of pay or compensatory time off for non-exempt employees. An overtime compensation agreement form should be signed and dated by each non-exempt non-represented staff employee and Police Officer Unit employee before the performance of any overtime work. Departments should provide agreement forms to newly hired non-exempt employees in these units, and to those current employees whose status changes to non-exempt upon transfer, reclassification, or promotion. Completed forms should be retained in the employee's department personnel file.
Overtime agreement forms for non-exempt employees in the Registered Nurse, Skilled Crafts, Research Support Professionals, Clerical and Allied Services, Health Care Professionals, and Technical units are optional. If agreement forms for these employees are not completed, the method of compensation is as indicated in their respective bargaining agreements.
Please note that there is no overtime compensation agreement form for employees in the Patient Care Technical unit; the method of overtime compensation for these employees is in accordance with their respective bargaining unit contract.
Calculate Overtime
Calculating Rates
The Fair Labor Standards Act (FLSA) requires premium overtime calculations to be based on hourly rates, either actual or derived. To convert an annual rate to an hourly rate, divide by 2,088 (hours per year); to convert a monthly rate to an hourly rate, multiply by 12 (months per year) and divide the result by 2,088.
- Annual Salary / 2,088 = Regular Rate
Overtime Payment
Although calculated on a workweek basis, premium overtime payments are not required to be made on a weekly basis. Payment for overtime may be made at the end of the regularly scheduled pay period in which it was earned.
If overtime pay cannot be accurately calculated in advance of the applicable payday, it may be paid in the next regular payday after the amount is computed.
Before You Begin
The examples for calculating rates are intended for non-represented staff employees. Additional resources can be found at PPSM-30: Compensation.
To determine overtime calculations for represented employees, the appropriate bargaining unit contract provisions must be applied.
To calculate the premium overtime rate, include all salary-related payments and compensation (e.g., base, on-call, shift differential, specialty, stipend and police certification pay) for the week, and then divide by the number of hours actually worked.