Overtime Calculations

The following calculation examples assume the employee is non-exempt from overtime requirements of the Colorado Overtime and Minimum Pay Standards Order ("COMPS Order") #38. For more information about COMPS coverage contact the Division at 303-318-8441.

The calculation of regular rate and overtime pay should be conducted very carefully, and other methods of calculation not described may be appropriate depending upon the particular circumstances.


Piece Rate

Piece Rate Overtime Calculation Example

When an employee is paid on a piece rate basis (for example, a certain amount is paid for every piece, dozen pieces, or for each service completed), the regular rate of pay is computed by first adding together the total earnings for the workweek from all piece rate work plus any other amount from that week for hours worked, waiting time, etc. This sum is then divided by the total number of hours worked in that week. For example, an employee works 50 hours in a week, earns a total of $600.00 for all piece work completed, and also receives a $100.00 nondiscretionary bonus that week.

  1. The regular rate of pay for the workweek is all of the earnings divided by the hours worked. $600.00 + $100.00 = $700.00. $700.00/50 = $14.00
  2. The regular rate wages (straight time) for the workweek are $700.00
  3. The premium overtime rate equals one-half the regular rate times the number of hours over 40 in a workweek: $14.00 x 10 hours x .5 = $70.00
  4. Total wages owed for the week are $700.00 + $70.00 = $770.00.
Tipped Employee

Tipped Employee Overtime Calculation Examples

(Three Equivalent Methods)

Calculation Assumptions

  1. Effective January 1, 2022, the applicable minimum wage is $12.56 and the tipped minimum wage is $12.56 - $3.02 = $9.54.
  2. The employee’s tips make up the difference between the tipped minimum wage of $9.54 and the full minimum wage of $12.56.
  3. No other payments occurred during the pay period that would have to be included in the regular rate (e.g., non-discretionary bonuses, commissions, etc.). Note that tips are not included in the regular rate for overtime calculation purposes.
  4. The employee works 50-hours in the workweek, with 10 hours of overtime owed under the 40-hour overtime criterion; no work in excess of the 12-hour overtime criteria occurred.
  5. The rate for overtime hours is based upon the full minimum wage of $12.56 not $9.54.

Example 1:
Straight time earnings for all hours worked, half-time OT

  • $12.56 x 50 = $628.00 (straight-time earnings for all hours)
  • $12.56 x .5 x 10 (OT half-time premium multiplied by number of OT hours) = $62.80
  • $628.00 + $62.80 = $690.80 (total owed before applying any tip credit)
  • $3.02 x 50 = $151.00 (tip credit which the employer may apply)
  • Total owed by the employer to the employee = $690.80 - $151.00 = $539.80

Example 2:
Straight time earning for regular hours worked, 1 ½ OT

  • $12.56 x 40 = $502.40 (straight-time earnings for regular hours)
    $12.56 x 1.5 x 10 (one and one-half OT premium multiplied by number of OT hours) = $188.40
    $502.40 + $188.40 = $690.80 (total owed before applying any tip credit)
    $3.02 x 50 = $151.00 (tip credit which the employer may apply)
    Total owed by the employer to the employee = $690.80 - $151.00 = $539.80

Example 3:
Tip credit applied before calculations

  • $9.54 x 40 = $381.60 (tip credit subtracted first, multiplied by regular hours)
    $12.56 x 1.5 = $18.84 (one and one-half OT premium based upon full minimum wage)
    $18.84 - $3.02 = $15.82 (OT premium rate after applying the tip credit)
    $15.82 x 10 = $158.20(OT premium rate after applying the tip credit multiplied by OT hours)
    Total owed by the employer to the employee = $381.00 + $158.20 = $539.80

For additional information about tipped employees, see Interpretive Notice & Formal Opinion (“INFO”) # 3: Tips (Gratuities) and Tipped Employees Under Colorado Wage Law

Non-Exempt Employee Working Two Jobs

Non-Exempt Employee Working Two Jobs Example

An employee working two non-exempt jobs at different hourly pay rates for the same employer within a specific workweek shall be calculated as follows:

  • Rate based on a weighted average: The employee’s regular rate for the particular workweek is determined by adding together all the wages earned performing each job, then dividing that amount by the total number of hours worked in all jobs, consistent with the federal Fair Labor Standards Act (FLSA) and resulting in a weighted average rate of pay

OR

  • Rate based on the job actually performed during overtime hours: The employee’s regular rate is the regular rate of hourly pay for the job being performed during the actual overtime hours.

    If there is no written agreement between the employee and the employer as to the method of calculating the regular rate of pay in advance of performing the work, the employee’s regular rate shall be calculated using the “weighted average” method described in COMPS Order #38 1.8.3(A).

For example, in one workweek, a non-exempt employee works 40 hours per week at $15 per hour, and then performs 10 hours of different duties at different times during the workweek at a rate of $13 per hour. The weighted average regular rate of pay for this employee would equal [(40 X $15) + (10 X $13)] / 50 = $14.60 per hour regular rate. Thus, using this calculation method, the employee would be owed overtime at a rate of $14.60 X .5 = $7.30 per hour for overtime work.


    References

    Colorado Overtime and Minimum Pay Standards Order ("COMPS Order") #38
    29 Code of Federal Regulations 548
    29 Code of Federal Regulations 778.111 (Pieceworker)
    29 Code of Federal Regulations 778.113 (Salaried Employees General Information)
    29 Code of Federal Regulations 778.114 (Salary for Fluctuating Hours)
    29 Code of Federal Regulations 778.418 (Pieceworkers)

    Websites

    U.S. Department of Labor
    FLSA Overtime Fact Sheet
    Code of Federal Regulations
    FLSA Overtime Calculator


    Contact Us

    Colorado Division of Labor Standards and Statistics | 303-318-8441 | Contact Us