Is there a special way of calculating overtime for an inside sales full-time salaried, non-exempt employee?

Overtime requirements vary from state to state.

In this case, it may seem complicated due to the amount of clarifying terms involved: inside sales, full-time, salaried, and, non-exempt. It will make it much easier to understand that, in this instance, the most significant term in that group, for the purposes of calculating overtime, is non-exempt.

Non-exempt employees are entitled to overtime pay as it’s defined by the applicable law. In California, for example, a non-exempt employee is eligible to earn overtime (calculated at 1.5 times the regular rate of pay) for hours worked over 8 in a day or beyond 40 in a week, as well as additional overtime (calculated at 2 times the regular rate of pay) for hours beyond 12 worked in a day.

Wage orders

In California, there are 17 Wage Orders that describe different sets of rules regarding overtime pay.

Inside sales jobs, for instance, falls into Wage Order 4. One important requirement in this order is that an inside sales employee who is non-exempt is eligible for to earn overtime in accordance with the standard California overtime rules.

Calculating overtime

Calculating overtime pay for a full-time, non-exempt salaried worker is essentially the same as calculating overtime pay for a non-exempt hourly worker. The first thing you have to do is calculate the worker’s regular rate of pay. You do this by dividing the total compensation earned by the hours worked in a period of time.

For example, if a non-exempt employee’s salary is $1,800 for an 80 hour pay period, then their regular rate of pay is $22.50 per hour. To find the applicable overtime rate, simply multiply the regular rate by the applicable overtime rate. If this worker is earns overtime at 1.5 times the regular rate, the overtime rate comes out to $33.75 per hour.

Additional note

The regular rate of pay includes several kinds of compensation, not just regular wages. If an employee earns commission, piece-rate work, or non-discretionary bonuses, these payments should be added into the total compensation for a period when calculating an employee’s regular rate of pay for a given period.

Remember

Overtime laws are largely determined by the state. The above example is given for an employee working in California. Be sure to check on your state’s specific laws.

Helpful links:

10 Things HR Needs to Know About California Wage and Hour Laws – HRhero.com

Hourly vs Salaried Non-exempt – Humanresourceblog.com