Calculating Overtime in 2025: How to Get it Right Every Time

Credit(s)

IRS CPE Credits: 1 Tax hour

Learn how to calculate regular rate of pay, apply bonuses properly, and stay compliant with 2025 rule changes

Calculating overtime pay for non-exempt employees may seem straightforward. Common folklore suggests that you simply count the hours the employee works beyond 40 hours a week. Then, you multiply that by 1.5 times their hourly pay rate, and you’re done, right? Not so fast. The truth is that overtime rules and the mathematics needed to arrive at the correct calculation can be extremely tricky. Overtime under the Fair Labor Standards Act is based on a unique term, created in 1938, known as the regular rate of pay. However, calculating the regular rate of pay is more complex than it seems. What’s included in the calculation? The reasonable costs of meals, lodging, nondiscretionary bonuses, commissions, on-call pay, shift differentials, cash benefit payments from Section 125 Cafeteria Plans—the list goes on. And that’s just computing the regular rate; we haven’t even touched on overtime yet! For example, when a bonus must be included in calculating the rate, to what overtime does it apply? When the bonus is paid, or when the bonus is earned? What if the bonus spans a long period, such as a quarter or a full year?

Then what happens if you get it wrong?  Nobody pays attention, do they? According to the Department of Labor they collected more than $230 million in back wages for more than 190,000 workers in FY 2021 alone. Of that amount collected, $138 million was for back overtime.

Penalties for overtime violations can be severe with the possibility of fines, imprisonment or both!  Add civil suits to the mix and the results can be devastating to any business no matter how large or small!  And just to make it interesting, most states use the same definition to calculate overtime as the FLSA does. So, one error can earn you double the penalties.

In this webinar, payroll expert Vicki M. Lambert, CPP, will walk you through how to accurately calculate overtime under FLSA rules for non-exempt employees. The session will cover key definitions, real-world calculation examples, and the new Department of Labor overtime regulations effective January 1, 2025.

Webinar Objectives

• Demystify the complexities of calculating overtime by breaking down the concept of the “regular rate of pay” under the FLSA.
• Clarify what types of compensation must legally be included—and excluded—when determining overtime eligibility.
• Address the practical challenges employers face when applying bonuses and incentive pay to overtime calculations.
• Highlight the financial and legal risks of non-compliance, including DOL enforcement trends and civil liability.
• Equip payroll professionals with updated tools and knowledge to implement compliant, accurate overtime practices for 2025.

Webinar Highlights

• What is the definition of overtime under the FLSA-- it's not what most people think
• What is the Portal-to-Portal Act and how does it affect overtime
• How to calculate the regular rate of pay
• Tracking hours worked and the use of rounding practices
• The eight narrowly construed exceptions to inclusion of payments in the regular rate
• When you must include a bonus in calculating your employee’s overtime pay
• What is the overtime premium and how is it calculated
• How to calculate overtime if a bonus covers more than one workweek
• Using the weighted average method to calculate overtime when and where it must be done
• When and how to use the “fluctuating workweek”
• When can the “alternate” method of calculating overtime be used

Who Should Attend

• Payroll Executives/ Managers/ Administrators/ Professionals/ Practitioners/ Entry Level Personnel
• Human Resources Executives/ Managers/Administrators
• Accounting Personnel
• Business Owners/ Executive Officers/ Operations and Departmental Managers
• Lawmakers
• Attorneys/ Legal Professionals
• Any individual or entity that must deal with the complexities and requirements of Payroll compliance issues