Regular Rate of Pay: The Overtime Calculation Base
The regular rate of pay is the base for overtime calculations, not just your hourly wage. How bonuses, commissions, and shift differentials raise the rate.
Overtime under the FLSA is paid at 1.5 times the 'regular rate of pay' — not simply 1.5 times the base hourly wage. The regular rate includes almost all compensation paid to an employee for hours worked in a workweek, and it can be higher than the stated wage.
What's included in the regular rate
The regular rate includes: base hourly wages, nondiscretionary bonuses (bonuses employees can reasonably expect to receive based on a formula or performance metric), shift differentials, piece-rate pay, commissions, and most other forms of compensation tied to hours worked or production.
What's excluded from the regular rate
The FLSA explicitly excludes from the regular rate: gifts (including discretionary bonuses given with no prior commitment), vacation pay, holiday pay, overtime premiums already paid, travel expense reimbursements, and benefit plan contributions. Pure discretionary bonuses — those where the employer has full discretion over the amount and timing and announces them after the fact — do not need to be included.
How to calculate it
Divide total compensation for the workweek (excluding exclusions) by total hours worked. The result is the regular rate for that week. If that week included overtime, the half-time premium owed on overtime hours is 0.5 × regular rate × OT hours (since the straight-time portion was already included in total compensation). The overtime calculator does this automatically for blended-rate scenarios.