Understanding Regular Rate of Pay and Overtime (U.S. Accounts Only)

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Updated August 25, 2025 15:24

Purpose:

This guide provides a high-level overview of overtime and the "Regular Rate of Pay" to help you understand these important payroll concepts. Navigating payroll compliance can be complex, and this information is designed to simplify key definitions and help you recognize when to seek more detailed guidance.

📚 Related articles:

Understanding Overtime

⚡ What Is Overtime?

At its core, overtime pay is compensation at a higher rate for work performed in excess of a defined regular work period. This is typically calculated at 1.5 times the employee's "Regular Rate of Pay" (which we'll cover next).

📌 | Federal vs. State Overtime Laws

While there's a federal standard, many states have their own specific rules for when overtime applies.

Federal Standard (FLSA): The Fair Labor Standards Act (FLSA) requires overtime pay for all hours worked over 40 in a single workweek. This is the most common rule.
State-Specific Rules: Many states, including California, have additional rules. These can include:
- Daily Overtime: Overtime for hours worked over a certain limit in a single workday (e.g., 8 hours in California).
- 7th Day Overtime: Overtime for hours worked on the seventh consecutive day of work in a workweek.
- Specific Industries: Some industries or types of work may have unique overtime rules.

⚠️ | Key Takeaway: Always be aware of the overtime laws in the states where your employees work, as they might be more stringent than federal rules.

⚡ Overtime in Push

Push is designed to help you track hours and calculate overtime accurately based on federal and state regulations.

The Hour Structure in every account dictates how overtime is allocated, based on state regulations. The Hour Structure can be viewed in the Company Setup under the Hours Structure page. The type of overtime is listed, as well as the number of hours before that type of overtime is calculated. The start week day should align with the pay period dates so that overtime is calculated accurately.

You can see the overtime detail in Push’s “Clock Hours Report” by employee.

Understanding Regular Rate of Pay

The "Regular Rate of Pay" (RROP) is a crucial concept, especially when calculating overtime. It's often more than just an employee's hourly wage.

⚡ What Is Regular Rate of Pay?

The Regular Rate of Pay is the weighted average rate of pay calculated using the total compensation an employee receives. It generally includes all forms of remuneration for employment paid to, or on behalf of, an employee, with some specific exclusions. The regular rate of pay is important because overtime in the United States is calculated through the regular rate of pay.

📌 | Important Note: This is not always the same as an employee's straight hourly wage.

⚡ What's Included (and What's Not) in the Regular Rate

Here are common examples of what is generally included or excluded when calculating the Regular Rate of Pay. Note: these are examples, not a complete listing or guide):

What's Typically Included	What's Typically Excluded
Hourly wages	Gifts, generally
Non-discretionary bonuses (e.g. performance bonus)	Payments for periods when no work is performed (e.g. holiday pay)
Shift premiums or differentials	Discrentary bonuses (employer has full say on if/when paid)
Commissions	Reimbursements for expenses
On-call pay	Some benefit plan contributions

Example Calculation of RROP

Employee Rate of Pay: 16.00
Timecard: Regular Pay 40 hours, Weekly Overtime 2.5 hours, Non-discretionary Bonus $100

The goal for RROP is to find the average weighted rate. Here’s the process:
First, we calculate the total dollars at straight time:
42.5 hours * $16.00 = $680

Then add in the non-discretionary bonus (see above for examples of dollars to be included)
$680 straight time dollars + $100 bonus = $780 total dollars

Then the average rate calculation (this is our RROP)
$780 total dollars/42.5 worked hours = $18.35 RROP. **Notice that the regular rate of pay used to calculate overtime is inflated because we included the non-discretionary bonus? This is why overtime rates are often higher than the straight 1.5x calculation.

Then we need to apply this back to our overtime to get the total amount. The straight amount has already been established at $16.00 per hour, so we just need to add in the overtime premium amount. This will be half of the RROP * the number of overtime hours. Here’s how it works:
Overtime straight amount: $16.00 * 2.5 hours = $40
Overtime premium amount: ($18.35 * 0.5 half of RROP) * 2.5 hours = $22.95
Total overtime Rate Dollars: $40 + $22.95 = $62.95
Push will display the total rate, which is $16 + ($18.35 * 0.5) = $25.18 Weekly overtime rate.

📌 | Federal vs. State Overtime Laws

The federal FLSA outlines the basic components of the regular rate. However, some states might have their own specific interpretations or requirements for what must be included or excluded, particularly for certain types of payments or industries.

⚠️ | Key Takeaway: If you offer various types of compensation beyond a standard hourly wage (like bonuses or commissions), it's vital to ensure they are correctly factored into the Regular Rate of Pay for overtime calculations.

Regular Rate of Pay in Push

Push automatically calculates the Regular Rate of Pay based on the earnings preset you select for your employees for weekly or biweekly pay cycles. Currently, Push does not calculate RROP automatically for semimonthly or monthly pay cycles because the workweek does not align with the pay cycle start and end dates.

Which presets count? Check out our standard presets article to see the full list of standard earnings and if they count toward the regular rate of pay (RROP).

Clients can see their RROP status for their unique presets when they enter in the e/d RROP; yes means the dollars are included in the RROP calculation

The pay stub in Push will also reflect the type of overtime, the number of hours, the rate of pay, and the total dollars for each overtime type. Here’s an example:

Important Considerations & Next Steps

Compliance is Key: Incorrectly calculating overtime or the regular rate can lead to significant penalties. Our software is a tool to help, but understanding the underlying rules is crucial.
When in Doubt, Ask a Professional: This guide provides high-level information. For specific scenarios, complex compensation plans, or questions about compliance in multiple states, we strongly recommend consulting with legal counsel or your accountant.
Push Support: If you have questions about using our software's features related to these topics, please reach out to our support team at support@pushoperations.com.
Disclaimer: This guide provides general information for educational purposes only and is not intended as legal, tax, or payroll advice. Laws and regulations are subject to change. Always consult with qualified professionals for advice tailored to your specific situation.

Additional Information

If you have any questions overtime or regular rate of pay, don't hesitate to get in touch with our Support Team at support@pushoperations.com. We're happy to assist you in ensuring accurate and compliant payroll practices.