Regular Rate of Pay (RRoP) is a payroll concept under the Fair Labor Standards Act (FLSA) which is a federal law that protects workers by setting standards for their overtime pay and other wage-related protections.
The law states that non-exempt employees who work more than 40 hours in a work week are entitled to overtime pay, which must be at a rate of at least 1.5x their "regular rate" for overtime hours that are in excess of 40 hours during a given work week.
Keep in mind: There are also state-specific overtime laws.
Correctly calculating the overtime pay an employee should receive is critical for both employer compliance and employee protection under the FLSA.
The regular rate is determined by summing the employee’s total compensation in a single workweek (minus excludable payments) and dividing it by the number of hours worked during the work week.
Essentially, the regular rate converts an employee's eligible supplemental payments to an hourly rate also, to then determine overtime pay (see the Federal Regulation on Overtime Compensation).
Total Earnings* - Excluded Earnings*
RRP = -----------------------------------------------
Total Hours Worked*
An employee's regular rate is the base hourly rate used for calculating overtime pay. When an employee is compensated solely by an hourly wage, the employee's regular rate is the same as the hourly wage.
However, when an employee is also compensated for eligible supplemental payments of earnings (such as production bonuses), these payments should be included in an employee's regular rate to accurately calculate overtime pay.
If you’re creating an "other" custom earning, included pay types could be wages earned from shift differentials, piece-rate pay, hazard pay, or make-up pay. Full list of inclusions here.*
*Note: Currently, Gusto treats the "Correction Payment" field as an additional earning to be included in overtime pay
If you’re creating an "other" custom earning, excluded pay types could be wages earned from profit-sharing, retirement contributions, stock options, or equity. Here’s a full list of exclusions*.
The overtime calculation will be based on a RRoP that consists of the following rules:
Cynthia is a non-exempt employee and is paid $15.00 an hour. One week, she worked 45 hours and earned a $200 non-discretionary bonus. The following week, she worked 44 hours. What is Cynthia’s gross pay for each week?
Week 1 calculation
RRoP = ($15 x 45 hours) + $200 / 45 = $19.44
Overtime Premium = RRoP * .5 = $9.72/hr
Overtime Pay = $9.72/hr * 5 hrs = $48.61
Gross pay = $675 regular wages + $200 ND bonus + $48.61
Total due: $923.61
Week 2 calculation
RRoP = $15.00 (there are no additional includible earnings)
Overtime Premium = $15 * .5 = 7.50
Overtime pay = $7.50 * 4hrs = $30
Gross pay = ($15 * 44 hours) + ($7.50 * 4hrs) = $690
Workweek breakdown allows you to accurately record hours and earnings on a per-week basis in order for overtime data to be calculated accurately. By default, the work week breakdown drawer appears in the payroll flow whenever overtime is entered.
We recommend that you appropriately log data into weekly inputs across the pay period for the most accurate pay. If you choose not to do that, we'll automatically evenly distribute the data across all work weeks.
Note: If hours were synced from Gusto Time tracking, the system will automatically distribute the hours based on the work week.
FLSA status | Employee type in Gusto | Eligibility for Gusto's RRoP |
Non-exempt |
| Eligible if on a weekly/bi-weekly pay schedule |
Exempt |
| Not eligible |
Certain earning types in payroll are automatically defaulted to being included or excluded by Gusto in accordance with the DOL.