Regular and Overtime Pay

1. GOALS
BUSINESS MATH © Thomson/South-Western Lesson 1.3 Slide 1
1.3 Regular and
Overtime Pay
 1) determine the normal and overtime
hours
 2) identify the overtime rates and
 3) develop a sense of appreciation for the
application of mathematics in the
calculation of overtime
Objectives

2. BUSINESS MATH © Thomson/South-Western Lesson 1.3 Slide 2
Overtime
1. Overtime can be referred to as the money
earned at an increased rate for working
more than the usual number of hours in
one week. For example, when someone
works on the weekend, he/she collects
overtime.
2. Due to the demand for the worker in a
factory or industry (for example), since the
work in a factory must be maintained
continuously, overtime is paid at a higher
rate than his basic rate.

3. BUSINESS MATH © Thomson/South-Western Lesson 1.3 Slide 3
Overtime and Overtime Pay Rates
 Companies record regular hours of work and
overtime, which is time worked beyond the regular
working day or week.
 Daily overtime is based on a regular working day,
such as an 8-hour day.
 So, an employee who works 10 hours in one day will
be paid for 8 hours regular time and 2 hours
overtime.
 If the regular working week is 40 hours, then an
employee who works 45 hours in a week is paid for
40 regular hours and 5 overtime hours.

4. BUSINESS MATH © Thomson/South-Western Lesson 1.3 Slide 4
Overtime Rates
 Overtime pay is often figured at one and a
quarter (×1.25) the regular-time rate and is
called time-and-a-quarter.
 The formula can be written as:1.25 X The
basic rate; 125% of the basic rate

5. BUSINESS MATH © Thomson/South-Western Lesson 1.3 Slide 5
Overtime Rates
 Overtime pay is often figured at one and a
half times (×1.5) the regular-time rate and is
called time-and-a-half pay.
 The formula can be written as: 1.5 X The
basic rate; 150% of the basic rate

6. BUSINESS MATH © Thomson/South-Western Lesson 1.3 Slide 6
Overtime Rates
 Overtime pay is often figured at double times
(×2) the regular-time rate and is called
double-times.
 The formula can be written as: 2 X The basic
rate; 200% of the basic rate

7. BUSINESS MATH © Thomson/South-Western Lesson 1.3 Slide 7
Overtime Rates
 Overtime pay is often figured at triple times
(×3) the regular-time rate and is called triple-
times.
 The formula can be written as: 3X The basic
rate; 300% of the basic rate

8. BUSINESS MATH © Thomson/South-Western Lesson 1.3 Slide 8
Overtime
1. For every week or fortnight, the payroll
clerk needs to know how many basic hours
and how many overtime hours were
accumulated by each worker to calculate
the gross wage (total wage).
Thus:
1.) The overtime Wage: the overtime rate X
the no of overtime worked
2. Gross Wage: The basic rate X basic week
 a.) The gross wage: The basic wage + The
overtime wage

9. BUSINESS MATH © Thomson/South-Western Lesson 1.3 Slide 9
Overtime
Thus:
 b.) The overtime wage: The gross wage-
The basic wage
 c.) The basic wage= The gross wage- the
overtime wage
 d.) The overtime worked= The overtime
wage/The overtime rate

10. BUSINESS MATH © Thomson/South-Western
Example #2
1. Karen gets paid $12.40 and hour plus time
and ½ for any hours worked more than 8 a
day.
Last week she worked the following:
M – 6, T – 12, W – 8, TH – 8, F – 10
What was her gross pay?
Reg Hours = Reg Pay =
OT Hours = OT Pay =
Gross Pay =
38 38 x $12.40 = $471.20
6 6 x 1.5 x $12.40 = $111.60
$471.20 + $111.60 = $582.80

11. BUSINESS MATH © Thomson/South-Western Lesson 1.3 Slide 11
Regular and Overtime Wages
 To find gross wages for an employee who has worked both
regular time and overtime, use these five steps.
Step 1: Find the number of regular-time and overtime hours
worked.
Step 2: Find the overtime pay rate or rates.
Step 3: Find the regular-time pay by multiplying the regular-time
hourly rate by the number of regular-time hours worked.
Step 4: Find the overtime pay by multiplying the overtime hourly
rate by the number of overtime hours worked. Match
time-and-a-half overtime hours and rate; match double-
time overtime hours and rate.
Step 5: Add the regular-time pay and the overtime pay.