Overtime rate

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Overtime rate can have different meanings in different countries and jurisdictions. In some countries there is no concept of a standard working week (or similar time period), and no bonus pay for exceeding a set number of hours within that week. In other countries, bonus pay is mandated for certain classes of workers when a set number of hours is exceeded.

In the United States a standard work week is considered to be 40 hours. Non-exempt workers (as defined by federal law) must be paid at a wage rate of 150% of their regular hourly rate for hours that exceed 40 in a week. Note that the start of the pay week can be defined by the employer, and need not be a standard calendar week start (e.g. Sunday midnight). Many employees, especially shift workers in the US have some amount of overtime built into their schedules so that 24/7 coverage can be obtained.

The overtime rate calculates the ratio between employee overtime with the regular hours in a specific time period. Even if the work is planned or scheduled, it can still be considered overtime if it exceeds what is considered the standard work week in that jurisdiction.

A high overtime rate is a good indicator of a temporary or permanent high workload. It could result in a higher illness Rate, higher labor costs, and lower productivity.

Calculation Formula

$\textstyle{\mbox{Overtime Rate } = \frac{\sum{\mbox{Overtime Hours}}}{\sum{\mbox{Regular Hours (however defined)}}}}$

• Unit of Measure: %

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