The Overtime Pay Dispute
A warehouse worker's pay stub shows 46 hours worked in one week at a base rate of $18/hour, with gross pay of $828. The worker claims overtime was not paid. The employer's written policy states: 'Overtime at 1.5× the regular rate is paid for hours over 40 in a workweek.' The stub shows only straight-time pay: 46 × $18 = $828. The worker also received a $60 'attendance bonus' that week, which the employer says is excluded from the overtime calculation. The worker argues the bonus should be included because it was earned that week. A payroll clerk insists 'the math checks out because 46 times 18 is 828.'
1. Calculate the correct gross pay under the policy, treating the attendance bonus as excluded, and identify the clerk's error.
Read the worked answer
Straight time: 40 × $18 = $720.
Overtime: 6 hours × ($18 × 1.5) = 6 × $27 = $162.
Correct base gross: $720 + $162 = $882, plus the $60 bonus = $942 total.
Clerk's error: The clerk verified that 46 × 18 = 828, which is arithmetically true but answers the wrong question. Straight-time multiplication applies only to the first 40 hours; hours 41–46 must be paid at the overtime rate. The stub underpaid base wages by $882 - $828 = $54.
Diagnosis: The clerk treated a rate-application problem as a multiplication check. The policy is unambiguous: hours over 40 earn 1.5×. The correct comparison is not 'does 46 × 18 equal 828' but 'does 828 equal 40 × 18 + 6 × 27,' which it does not.
2. Analyze the bonus dispute: if the attendance bonus is included in the regular rate, recompute the overtime and total pay. Explain which interpretation is more defensible and what fact would settle it.
Read the worked answer
If the bonus is included: It is earned in the workweek, so allocate it across all hours worked: $60 / 46 ≈ $1.304 per hour. The regular rate becomes $18 + $1.304 ≈ $19.304.
Overtime premium: The employee has already been paid straight time for all 46 hours at $18 (plus the bonus, which is straight-time compensation). The overtime premium owed is 0.5 × regular rate × 6 overtime hours = 0.5 × $19.304 × 6 ≈ $57.91. Alternatively, total due = 40 × $19.304 + 6 × ($19.304 × 1.5) = $772.16 + $173.74 = $945.90, which equals $828 + $60 + $57.91 ≈ $945.91 (rounding).
Which is more defensible: Nondiscretionary bonuses tied to attendance and earned in the week are generally included in the regular rate; truly discretionary bonuses are not. The word 'attendance' suggests it is tied to a condition (showing up), which leans toward inclusion. The settling fact is the bonus plan's written terms: whether it is promised/announced and conditioned on attendance (nondiscretionary, include) or awarded at the employer's sole discretion with no prior promise (exclude). The policy text alone does not resolve this.