Sec. 146-1.4. Overtime hourly rates

An employer shall pay an employee for overtime at a wage rate of 1½ times the employee's regular rate for hours worked in excess of 40 hours in one workweek. When an employer is taking a credit toward the basic minimum hourly rate pursuant to section 146-1.3 of this Subpart, the overtime rate shall be the employee's regular rate of pay before subtracting any tip credit, multiplied by 1½, minus the tip credit. It is a violation of the overtime requirement for an employer to subtract the tip credit first and then multiply the reduced rate by one and one half.Example 1: Non-tipped employee (when the basic minimum hourly rate is less than or equal to $10.00).Example 2: Tipped employee (when the basic minimum wage was $5.00, and the maximum tip credit was $2.25, for food service workers).

An employee regularly paid $10 per hour who works 50 hours in a workweek:
Regular rate:	$10.00 per hour
Overtime rate:	$10.00 x 1.5 = $15.00 per hour
Wage for 40 hours:	$10.00 x 40 = $400.00
Wage for 10 hours:	$15.00 x 10 = $150.00
	Total $550.00

A food service worker regularly paid $7.25 per hour minus a tip credit of $2.25 per hour, for a wage rate of $5 per hour, who works 50 hours in a workweek:
Regular rate:	$7.25 per hour
Overtime rate:	$7.25 x 1.5 = $10.875 per hour
Wage rate for 40 hours:	$7.25 - $2.25 = $5.00 per hour
Wage rate for 10 hours:	$10.875 - $2.25 = $8.625 per hour
Wages for the workweek:	$5.00 x 40 hours = $200.00
	$8.625 x 10 hours = $86.25
	Total $286.25

Alternative calculation:
Wages for the work week:	$7.25 x 40 hours = $290.00
	$10.875 x 10 hours = $108.75
	Subtotal $398.75
Minus tip credit	$2.25 x 50 hours = - 112.50
	Total $286.25