Need help with Overtime formula.

[Raisincain]

Hello!

I have several employees that work for me at $7.00 per hour. They want to
work more hours per week at this same wage, but I am unable to afford
overtime for them.

Department of labor laws state that every hour over 40 per week must be paid
at 1.5 the normal hourly rate. My employees have agreed to take a cut in pay
to enable me to pay them whatever amount is necessary if, when overtime is
applied, they average out to $7.00 per hour. In other words, they are
willing to work for 40 hours per week at x amount and a variable number of
hours for x*1.5 as long as the x +(x*1.5) averages $7.00 per hour.

This number x will change with each schedule since they will work a
different number of hours per schedule (ie an employee may work 55 hours in
week one, 50 hours in week two, 60 hours in week three, and so on). Can
anyone help with a formula that will solve for x based on these changing
hours with the average rate of pay still staying at or around $7.00 per hour?

Thank you,
Brad in Dallas

 

[Roger Govier]

see response to your posting in another group

 

[Stan Brown]

Sat, 8 Dec 2007 10:08:00 -0800 from Raisincain

Department of labor laws state that every hour over 40 per week
must be paid at 1.5 the normal hourly rate. My employees have
agreed to take a cut in pay to enable me to pay them whatever
amount is necessary if, when overtime is applied, they average out
to $7.00 per hour. In other words, they are willing to work for 40
hours per week at x amount and a variable number of hours for x*1.5
as long as the x +(x*1.5) averages $7.00 per hour.

This is not an Excel answer, but a legal one. I'm not a lawyer, but
I believe you're buying yourself a heap of trouble. Check with your
state's department of labor, and I'll bet you'll find this scheme is
illegal.

If I am not mistaken, U.S. and state laws require that overtime
employees who are not exempt must be paid 1.5 times their *regular*
rate. If their regular rate is $7 an hour, you must pay them $10.50
for overtime.

The law doesn't let you reduce their regular rate for their overtime
hours and then reinstate it for their straight-time hours, not even
with their consent. (This is to prevent employers pressuring
employees into just the sort of scheme you propose.) Even if it did,
the reduced rate would be 2/3 of $7.00, or about $4.67, which is well
below minimum wage and therefore a *second* violation.

If you can't afford to pay overtime, you can't have workers work
overtime.

 

[ilia]

If your hours worked is in B3, and your Average Rate (that you want)
is in C3, your hourly base rate is going to be as follows:

=(C3-B3)/(1.5*B3-20)

Notice that if your hours go below 40, this base rate will be over 7
hours.

 

[ilia]

Sorry, I meant:
=(C3-B3)/(1.5*B3-20)

If your hours worked is in B3, and your Average Rate (that you want)
is in C3, your hourly base rate is going to be as follows:

=(C3-B3)/(1.5*B3-20)

Notice that if your hours go below 40, this base rate will be over 7
hours.

 

[ilia]

Third time is the charm.

=(C3*B3)/(1.5*B3-20)

Sorry, I meant:
=(C3-B3)/(1.5*B3-20)

 

[Spike9458]

I saw a company my friend worked for get in trouble with the US Dept
of Labor for that ... not paying overtime. In order to be required to
pay it, the company income has to be at or above a certain threshold,
I'm not sure what that is. Anyway, their reason in not paying it is
that working overtime was 'voluntary', so they just paid straight-
pay ... for years. Well, in addition to a hefty fine and damaged
reputation, the company had to go back just 2 years and pay everyone
that worked overtime the money that was due, whether they still worked
there or not.

Besides, how loyal can you be to your loyal employees if you won't pay
them the overtime.