Betty is paid by the piece rate method of pay. In other words, she is paid based on what she produces. The piece rate for her job is currently $1.50 for each desert prepared by her. Ma determined from Betty's daily production reports that Betty prepared 175 deserts during the current week.
If Betty's calculated earnings based on her production are less than what Betty would have earned based on minimum wage and her actual hours worked, Ma is required by law to pay her minimum wage.
- Overtime Hours - Since Betty is nonexempt, Ma must also pay her for any overtime hours that she worked. Ma determined from Betty's time card that she worked 45 hours during the week so she is entitled to 5 hours of overtime pay.
- Piece Rate Calculation - Let's first calculate what Betty's Production Earnings are for the week.
Production (Piece Rate) Earnings = Number Deserts Produced X Rate Per Desert
Production Earnings = 175 pastries X $1.50
Production Earnings = $262.50
Let's convert this to a rate per hour.
Production Straight Time Rate Per Hour = Production Earnings / Hours Worked
Production Straight Time Rate Per Hour = $262.50 / 45 hours
Production Straight Time Rate Per Hour = $5.83
Regular Earnings Calculation - Since Betty's calculated production rate per hour of $5.83 is less than the current minimum wage of $7.25 an hour, Ma must pay Betty the minimum wage for her actual hours worked.
Regular Earnings = Minimum Wage Per Hour X 40 hours
Regular Earnings = $7.25 X 40 hours
Regular Earnings = $290.00
Overtime Calculation - In addition. since Betty worked 5 hours of overtime Ma must also pay her overtime based on minimum wage. Betty's overtime rate for the current week is 1.5 times the minimum wage ($7.25 X 1.5) or $10.88
Overtime Earnings = Overtime Rate X Overtime Hours
Overtime Earnings = $10.88 X 5
Overtime Earnings = $54.40
- Regular Earnings Plus Overtime - Finally all we need to do is add Betty's regular and overtime earnings to calculate her total earnings for the week.
Total Earnings = Regular Earnings + Overtime Earnings
Total Earnings =$290.00 + 54.40
Total Earnings = $344.40
Total Weekly Earnings = $344.40