You may have noticed employees asking more questions about their overtime rate, and you are not alone. Many businesses are hearing, why is my overtime rate so high on my check, why does my pay stub show multiple overtime rates, or why does my overtime look different from what I expected? Recent payroll-transparency requirements (often known by employees as the “Big Beautiful Bill”) mean your pay stub now shows more detail about how your overtime is calculated. There is nothing about how overtime is earned that has changed, only the manner in which it appears on your paycheck may appear new and confusing.
- Overtime is Based on Your “Regular Rate,” Not Just Your Hourly Rate: Many people assume overtime is simply your hourly rate * 1.5. However, overtime must be calculated using your regular rate and this may include hourly wages, shift differentials, bonuses, incentives, commissions, and certain stipends. If any of these apply, your overtime rate may be higher than expected and that is normal.
- Your Pay Stub Now Shows More Detail: Payroll systems now break down overtime more clearly. It will include regular rate, OT Premium, Weighted OT Rate, Bonus OT Adjustment, and Multiple overtime lines. This does not mean your pay has changed, it just means your pay stub is more transparent.
- If you Work at More Than One Rate, Overtime is Weighted: If you work different jobs or shifts with different pay rates in the same week, your overtime rate becomes a weighted average. It can create overtime rates that appear unfamiliar. These unusual numbers are correct as they reflect the blended rate required by law.
- Bonuses Can Increase Your Overtime Rate: If you receive a bonus during the pay period, the bonus must be included in your regular rate. This can generate a higher overtime rate, an extra overtime adjustment line, and a one-time increase in your pay stub. This is normal and required.
- Your Overtime Rate May Change Week to Week: Your overtime rate can vary depending on bonuses, shift differentials, holiday pay, PTO usage, different job codes, and weighted rates. A changing overtime rate does not mean your pay is wrong.
If you have questions about your overtime rate or pay stub please reach out to your supervisor, HR, or payroll for clarification. There are no bad questions, and we are here to help you understand your pay.
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