How do I calculate the "regular rate of pay" for overtime purposes when I receive commissions or a non-discretionary bonus?
To calculate your regular rate of pay for overtime, you must add all your compensation for a workweek (hourly pay, commissions, non-discretionary bonuses) and then divide that total by all hours you worked. This rate is then used to calculate your overtime premium.
Here is how to calculate your overtime pay:
Step 1: Identify the workweek and gather records
Collect your pay stubs, commission statements, and any bonus agreements for the specific workweek you are calculating. A workweek is a fixed and regularly recurring period of 168 hours, or seven consecutive 24-hour periods.
Step 2: Add all compensation earned
Total all compensation you earned for that workweek. This must include your hourly wages, piece-rate earnings, commissions earned in that week, and any non-discretionary bonuses. A non-discretionary bonus is one that is promised for meeting specific goals.
Step 3: Calculate the regular rate of pay
Divide your total compensation (from Step 2) by the total number of hours you worked in that workweek. The result is your "regular rate of pay" for overtime purposes.
Step 4: Calculate the total overtime pay
Multiply your regular rate by 0.5 (for time-and-a-half) to find your overtime premium. Then, multiply that premium by the number of overtime hours you worked. If you worked double-time hours, you would multiply the regular rate by 1.0.
Important considerations:
If you receive a non-discretionary bonus that covers a period longer than one week (e.g., a quarterly bonus), your employer must apportion that bonus across the pay periods it was earned. They must then recalculate your regular rate and pay the additional overtime owed for each of those past workweeks.
Warnings and limitations:
These calculations can be complex, and employers frequently make errors. True discretionary bonuses, which are infrequent gifts not tied to performance or hours worked, are not included in the regular rate. Always check your pay stubs to ensure all earned compensation is included in the overtime calculation.
This is general information and does not constitute legal advice. For complex situations involving multiple pay types or disputes over calculations, you should consult with a qualified California employment attorney.
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Disclaimer:
This information is for general guidance only and should not be considered as legal advice. Please consult with a qualified attorney for specific legal matters.
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Updated: August 13, 2025
Employment Law
Worker rights, wages, and employment regulations
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