- Add up your total number of overtime hours. …
- Divide overtime hours by regular hours. …
- Multiply the result by 100.
Hourly Rate and Overtime Rate
What is overtime percentage?
The ratio of an employee’s overtime hours to their regular hours worked during a pay period is known as the overtime percentage. Since this metric provides information on employee productivity and performance, human resources professionals use it to determine hiring and recruitment needs. Since overtime hours represent the time employees spend working on projects outside of regular working hours, a higher overtime percentage typically indicates lower employee productivity.
The following formula can be used to determine the overtime percentage for both individual employees and your entire organization:
Overtime % = (overtime hours) ÷ (regular hours) x 100
What is overtime?
The number of hours a full-time employee works past their regularly scheduled hours is referred to as overtime. The number of overtime hours can vary depending on the employer and the jurisdiction’s labor and employment laws. For instance, a 40-hour workweek is typically a standard schedule, and any additional hours worked by employees are considered overtime. Your employer and the labor laws and regulations to which your employer is subject will determine which of the following categories your overtime percentage falls under:
How to calculate overtime percentage
To calculate overtime percentage, use the formula overtime% = (overtime hours) – (regular hours) x 100:
1. Add up your total number of overtime hours
Determine how many hours of overtime you spent working overall during the pay period you are comparing. The additional hours you put in during a biweekly payroll period, for instance, count toward your overall number of overtime hours. As an illustration, let’s say an administrative assistant has a bi-weekly payroll schedule and works a traditional 40-hour workweek. As a result, they must determine their overtime pay using two 40-hour workweeks. The assistant’s total overtime would be six hours if they worked two hours the following week and four hours the first week of payroll.
2. Divide overtime hours by regular hours
Subtract the number of regular hours in your pay period from the total number of overtime hours you worked. Due to the administrative assistant’s calculation of the overtime percentage in the aforementioned example, their total number of regular hours is 80. They plug these values into the formula:
Overtime % = (6) ÷ (80) x 100 = (0. 075) x 100.
3. Multiply the result by 100
To convert a decimal number into a percent, multiply the result of dividing your overtime hours by your regular hours by 100:
Overtime % = (6) ÷ (80) x 100 = (0. 075) x 100 = 7. 5%.
This value can reveal how frequently you work overtime and how many hours you put in outside of your regular working hours. Considering your overall productivity to see if you can streamline your work to cut down on the amount of overtime you work is a good idea if you find that your organization has a high percentage of overtime.
For more information on how to determine the percentage of overtime pay for varying working hours, consider the examples below:
Example 1: Overtime for fixed hours
Schedules with a fixed number of hours that employees must work are known as fixed-hour schedules. For instance, a 40-hour workweek is typical for a full-time schedule with fixed hours. The typical schedules for pay periods are weekly, biweekly, twice monthly, or monthly.
Assume for the purposes of this illustration that a worker has a fixed-hour schedule of 40 hours per week. On a bi-weekly payroll schedule, their pay period runs from Monday to Thursday, giving them 80 hours of regular work per pay period. They can determine their overtime percentage by using the following formula if they put in 16 hours of extra time:
Overtime% is calculated as follows: (16) (80) x 100 = 0 2 x 100 = 20%.
20% of the employees’ total working hours are overtime hours, or 20% of their total working hours. If the employee rarely works overtime, this value might not accurately represent performance or output. However, if the employee frequently works beyond the normal call of duty, this value may be indicative of poor performance and productivity.
Example 2: Overtime for all employees
You can use this example to determine the overtime percentage for every employee on your team or across your entire company. Divide the total number of regular working hours by the total number of overtime hours worked by all employees.
In this example, let’s say a company’s human resources manager wants to determine the percentage of overtime work for its 20 full-time employees. Each weekly pay period equates to 40 regular working hours in the company’s monthly measurement of the overtime rate. The HR manager first determines the total number of overtime hours that workers put in during the time period by using the following data.
This indicates that the staff of the company worked 38 hours of overtime during the month. The HR manager then applies the formula to determine the percentage of overtime work:
Overtime% is calculated as follows: (overtime hours) / (regular hours) x 100 = (38 overtime hours) / (160 regular hours) x 100 = 0 24 x 100 = 24%.
The HR manager can then use this information to determine whether the higher overtime percentage is due to a special project or if it results from a drop in productivity because the staff size is smaller for this organization. This overtime percentage may indicate that employees are seizing opportunities to contribute to the company’s future success, such as if the business is bringing on new clients or creating new products.
What is the formula to calculate overtime rate?
The FLSA states that the formula to determine overtime pay is the nonexempt employee’s regular rate of pay multiplied by one. 5 x overtime hours worked.
What is the percentage of overtime?
The terms “overtime premium” and “overtime rate of pay” are frequently used to describe overtime payments. The most common overtime rate is time and a half, which is 50% more than the employee’s hourly rate. So, for each hour of overtime, you get paid the equivalent of 1 5 the regular hourly rate.