# Calculating Overtime FAQ

**What is “Chinese Overtime”?**If an employee is paid a fixed salary each workweek for hours that vary up and down from week to week, the employer may use an overtime calculation method called “fixed salary for fluctuating workweeks”. This is the method that some companies in the past used to refer to informally as “Chinese overtime”. It is easily the most favorable method for employers of computing overtime, but certain requirements have to be met. To use this method:

- the employee must have a work schedule with fluctuating hours, i.e., not be on a fixed schedule,
- and must be paid a fixed salary that is meant to be straight-time compensation for all hours worked in a workweek, whether the employee works less than or more than 40 hours per week.
- With almost no exceptions, no reduction in the salary may be made for short workweeks.
- In addition, the salary must be large enough to ensure that the regular rate will never drop below minimum wage.

**I am only paid 1/2 of my regular rate for overtime and sometimes even less. Is this right?**- See above.

**I am paid a day rate. How should my overtime be calculated?****What if I am a salaried non-exempt employee? How is overtime calculated?****What if I work 2 different jobs at different pay rates?**- According to the U.S. Department of Labor, when an employee (in a single workweek) performs 2 or more different types of work with different straight-time rates, the regular rate for that week is the weighted average of the pay rates. That is, the earnings from all hourly rates are added together and the total is then divided by the total number of hours worked at all jobs. In addition, the FLSA allows, under certain conditions, the computation of overtime pay based on one and one-half times the hourly rate in effect when the overtime work is performed.

**Examples of how overtime may be calculated:**- Weighted average of the different rates. The regular rate of an employee who works 35 hours per week at $15 per hour as a machine operator ($525), and works 10 hours that same week at $7 per hour cutting the grass outside the plant ($70), is $595 divided by 45 hours, or $13.22 per hour. Thus, the overtime rate for this employee is one and one-half times $13.22, or $19.83 per hour, regardless of which job the employee performs during the extra hours.
- Alternatively, if employer and employee agree, before the work is performed, that the overtime rate will be based on the regular rate that applies to the type of work performed during the hours in excess of forty. Therefore, if an employee spends 35 hours in a week working as a machine operator at $15 per hour, and five hours a week cutting the grass at $7 per hour, the overtime rate for any additional hours spent cutting the grass is $10.50 per hour. Conversely, the overtime rate for any additional hours spent working as a machine operator is $22.50.

**Should bonuses be included when calculating my overtime?**- In most cases – Yes. Unless your bonus is completely discretionary on the part of your employer, it must be included in determining your “regular rate” of pay. If your bonus is tied to achieving certain preset goals, quotas or other requirements, it is not considered to be discretionary.