What Is Overtime Pay for $27 an Hour?
Understand overtime pay: learn how your regular rate is calculated for $27/hour and who is eligible for premium wages.
Overtime pay provides additional earnings for work performed beyond standard working hours, ensuring employees are compensated at a higher rate when their workweek extends beyond a predetermined limit. This compensation is calculated based on federal and state regulations. Overtime provisions apply to eligible employees, impacting their total weekly earnings.
Understanding the Standard Overtime Rate
The federal standard for overtime pay, established by the Fair Labor Standards Act (FLSA), mandates that eligible employees receive one and one-half times their regular rate of pay for all hours worked over 40 in a workweek. For an employee earning a straightforward hourly wage of $27, the standard overtime rate becomes $40.50 per hour ($27 multiplied by 1.5).
Consider an employee who earns $27 per hour and works 50 hours in a single workweek. For the first 40 hours, the employee earns $1,080 ($27 per hour x 40 hours). The remaining 10 hours are considered overtime. For these 10 overtime hours, the employee earns $40.50 per hour, totaling $405. The employee’s total gross pay for that 50-hour workweek would be $1,485 ($1,080 for regular hours + $405 for overtime hours). While federal law sets this baseline, some state laws may have their own overtime rules, which can provide more favorable conditions for employees.
Determining Your Regular Rate of Pay
The “regular rate of pay” used for overtime calculation is often more complex than just an employee’s stated hourly wage. This rate must include “all remuneration for employment” paid to, or on behalf of, the employee, with certain statutory exclusions. To determine the regular rate, an employer divides the total compensation earned in a workweek by the total number of hours actually worked in that week.
Certain additional payments must be included in the regular rate calculation. Non-discretionary bonuses, such as those based on production, quality, accuracy, or attendance, are typically included. Commissions also contribute to the regular rate. Payments like shift differentials, which are extra amounts paid for working undesirable shifts, must also be incorporated.
Example 1: Bonus Calculation
For example, if an employee earning $27 per hour works 40 hours and also receives a $150 non-discretionary bonus in that workweek, the calculation changes. The total earnings for the week would be $1,080 (40 hours x $27) plus the $150 bonus, totaling $1,230. The regular rate of pay for that week would then be $30.75 ($1,230 divided by 40 hours). Consequently, any overtime hours worked during that week would be paid at $46.125 per hour ($30.75 multiplied by 1.5).
Example 2: Commission Calculation
Similarly, if an employee works 45 hours at $27 per hour and earns a $200 commission during that week, the total remuneration is $1,215 (45 hours x $27) plus the $200 commission, amounting to $1,415. The regular rate for that week would be approximately $31.44 ($1,415 divided by 45 hours), making the overtime rate approximately $47.16 per hour.
Who Qualifies for Overtime Pay
Eligibility for overtime pay depends on whether an employee is classified as “non-exempt” or “exempt” under the Fair Labor Standards Act (FLSA). The majority of hourly workers are considered non-exempt, meaning they are entitled to overtime pay for hours worked beyond 40 in a workweek.
Exempt employees are not eligible for overtime pay under federal law. To qualify as exempt, employees generally must meet three specific tests: the salary basis test, the salary level test, and the duties test. The salary basis test requires that the employee receive a predetermined, fixed salary that is not subject to reduction based on the quality or quantity of work performed. The salary level test mandates that the employee’s salary meet a minimum threshold, which, as of January 1, 2025, is set at $1,128 per week, equivalent to $58,656 annually.
The duties test requires that the employee’s primary job responsibilities fall into one of the recognized exempt categories, such as executive, administrative, professional, outside sales, or computer employees. All three criteria must be met for an employee to be properly classified as exempt; otherwise, they are generally considered non-exempt and must be paid overtime for qualifying hours.