Examples of Final Rule: Overtime

Example 1: Jamie, an HR manager at a catering company, earns a fixed salary of $44,200 per year ($850 per week) for a 50 hour workweek. The salary does not include the overtime premium. Because the salary is for 50 hours per week, Jamie’s regular rate is $17 ($850/50). In a normal 50 hour week, the employer would pay Jamie the additional half time overtime premium for the 10 hours of overtime ($8.50/hour). If Jamie worked more than 50 hours in a week, the employer would also owe overtime compensation at time and a half the regular rate ($17 x 1.5) for hours beyond 50 (because the salary does not cover any payment for those hours).

Example 2: Alexa, a manager at an advertising agency, earns a fixed salary of $41,600 per year ($800 per week) for a 40 hour workweek. Because her salary is for 40 hours per week, Alexa’s regular rate is $20 per hour. If Alexa works 45 hours one particular week, the employer would pay time and one-half (overtime premium) for five hours at a rate of $30 per hour. Thus, for that week, Alexa should be paid $950, consisting of her $800 per week salary and $150 overtime compensation.

Example 3: Andre, a manager on a construction project, has an agreement with his company where he is paid a fixed salary of $39,520 per year ($760 per week) for a 45 hour workweek. The fixed salary includes both straight time for the first 40 hours ($16 regular rate x 40 hours) and overtime compensation for hours 41-45 ($24 overtime rate x 5 hours). If Andre’s schedule changes in any way for any week, his salary needs to be adjusted to reflect the hours actually worked for that week.

Example 4: John, a manager for a local hardware store who satisfies the duties test for the executive exemption, currently begins work at 9am Monday— Friday. Under the Final Rule’s new salary level, he would be newly entitled to overtime compensation. Among other duties, John works until the store closes at 7pm. The store may wish to adjust John’s schedule such that he doesn’t need to begin work until 10am, thus limiting the number of overtime hours he works.

Example 5: Assume a supervisor at a private gym who satisfies the duties test for the executive exemption earns $37,000 per year ($711.54 per week). The supervisor regularly works 45 hours per week. The employer may choose to instead pay the employee an hourly rate of $15 and pay time and one-half for the 5 overtime hours worked each week.

Examples taken from: https://www.dol.gov/whd/overtime/final2016/general-guidance.pdf