Want create site? Find Free WordPress Themes and plugins. It is fairly simple to calculate how much overtime a nonexempt employee is owed when the employee is paid an hourly wage. But calculating overtime becomes a bit more difficult when the employee is paid on a salary basis.

The methods for calculating overtime vary depending on whether the employee’s salary is intended to cover a single workweek of 40 hours (see Scenario 1), a single workweek of less than 40 hours (see Scenario 2), a single workweek of more than 40 hours (see Scenario 3) or a period longer than a workweek such as half a month (see Scenario 4) or a full month (see Scenario 5).

## Scenario 1

Sal is hired at a salary of \$400 per week. It is understood that this salary is compensation for a regular workweek of 40 hours.

This week, Sal worked a total of 45 hours to finish a special project.

To calculate Sal’s total gross pay this week, his church takes the following steps:

1. Calculate the regular rate of pay. Sal’s weekly salary (\$400) is divided by the number of hours it is intended to compensate (40 hours) for a regular rate of pay of \$10 per hour.
2. Calculate Sal’s overtime rate of pay. Sal’s overtime rate of pay is calculated by multiplying his regular rate of pay (\$10 per hour) by one and one-half for a result of \$15 per hour.
3. Calculate the overtime compensation that Sal is owed. Sal’s overtime compensation is the number of overtime hours he worked this week (five) multiplied by his overtime rate of pay (\$15) for a result of \$75.
4. Calculate Sal’s total gross pay (before taxes, benefits and other deductions). Sal’s total gross pay is his weekly salary (\$400) plus his overtime compensation (\$75), or \$475.

## Scenario 2

Sally is hired at a salary of \$400 per week. It is understood that this salary is compensation for a regular workweek of 35 hours.

This week, Sally worked a total of 45 hours to finish a special project.

To calculate Sally’s total gross pay this week, her church takes the following steps:

1. Calculate the regular rate of pay. Sally’s weekly salary (\$400) is divided by the number of hours it is intended to compensate (35 hours) for a regular rate of pay of \$11.43 per hour.
2. Calculate Sally’s overtime rate of pay. Sal’s overtime rate of pay is calculated by multiplying her regular rate of pay (\$11.43 per hour) by one and one-half for a result of \$17.14 per hour.
3. Calculate the ‘gap time’ that Sally is owed.
4. Calculate the overtime compensation that Sally is owed. Sally’s overtime compensation is the number of overtime hours she worked this week (five) multiplied by her overtime rate of pay (\$17.14) for a result of \$85.71.
5. Calculate Sally’s total gross pay (before taxes, benefits and other deductions). Sally’s total gross pay is her weekly salary (\$400) plus her gap time compensation (\$57.14) plus her overtime compensation (\$85.71), or \$542.85.

## Scenario 3

Larry is hired at a salary of \$400 per week. It is understood that this salary is compensation for a regular workweek of 50 hours.

To calculate Larry’s total gross pay in a typical, 50-hour workweek, his church takes the following steps:

1. Calculate the regular rate of pay. Larry’s weekly salary (\$400) is divided by the number of hours it is intended to compensate (50 hours) for a regular rate of pay of \$8 per hour.
2. Calculate Larry’s overtime premium rate. Because Larry’s salary is intended to cover 50 hours, his church needs to pay him only an additional one-half of his regular rate of pay for all hours beyond 40, or \$4 per hour.
3. Calculate the overtime compensation that Larry is owed. Larry’s overtime compensation is the number of overtime hours he worked this week (10) multiplied by his overtime overtime rate of pay (\$4) for a result of \$40.
4. Calculate Larry’s total gross pay (before taxes, benefits and other deductions). Larry’s total gross pay is his weekly salary (\$400) plus his overtime compensation (\$40), or \$440.

One week, Larry worked a total of 55 hours to finish a special project.

To calculate Larry’s total gross pay this week, his church takes the following steps:

1. Calculate Larry’s overtime rate for hours beyond 50. For hours beyond the 50 hours that Larry’s salary is intended to cover, his church must pay him one and one-half times his regular rate of pay, or \$12 per hour.
2. Calculate the beyond-50-hours overtime compensation that Larry is owed. Larry’s beyond-50-hours overtime compensation is the number of hours beyond 50 he worked this week (five) multiplied by his overtime rate of pay (\$12), for a result of \$60.
3. Calculate Larry’s total gross pay (before taxes, benefits and other deductions). Larry’s total gross pay is his weekly salary (\$400) plus his hours-40-through-50 overtime compensation (\$40) plus his beyond-50-hours overtime compensation (\$60), for a total of \$500.

## Scenario 4

Samantha Semimonthly is paid a salary of \$1,000 twice a month.

To calculate Samantha’s total gross pay, her church takes the following steps:

1. Convert Samantha’s semimonthly salary to its workweek equivalent. Samantha’s \$1,000 salary is multiplied by 24 (the number of semimonthly paychecks she receives in a year) and then divided by 52 (the number of weeks in a year), for a workweek equivalent of \$461.54.
2. Calculate her total gross pay based on the resulting workweek equivalent. The \$416.54 workweek-adjusted salary is plugged in to the aforementioned scenarios, depending on whether her salary is intended to cover a workweek of 40 hours (see Scenario 1), of less than 40 hours (see Scenario 2) or of more than 40 hours (see Scenario 3).

## Scenario 5

Marvin Monthly is paid a salary of \$2,500 a month.

To calculate Marvin’s total gross pay, his church takes the following steps:

1. Convert Marvin’s monthly salary to its workweek equivalent. Marvin’s \$2,500 salary is multiplied by 12 (the number of monthly paychecks he receives in a year) and then divided by 52 (the number of weeks in a year), for a workweek equivalent of \$576.92.
2. Calculate his total gross pay based on the resulting workweek equivalent. The \$576.92 workweek-adjusted salary is plugged in to the aforementioned scenarios, depending on whether his salary is intended to cover a workweek of 40 hours (see Scenario 1), of less than 40 hours (see Scenario 2) or of more than 40 hours (see Scenario 3).
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This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.