Regular rate of pay

What does “regular rate of pay” mean?

The regular rate of pay is the figure overtime is calculated from, and it is not simply the hourly wage: it includes most non-discretionary bonuses, commissions and shift differentials.

This is the most commonly miscalculated number in payroll. An employer pays a production bonus, does not fold it into the regular rate, and every overtime hour worked in that period is underpaid as a result.

Because the error is systematic rather than individual, it typically affects everyone who earned the bonus, across every period it was paid.

Why it matters to an employer

If your business pays any bonus or commission to non-exempt staff, this is the first thing worth checking.