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Kari works fluctuating work schedules. Besides her fixed salary of $1,063 per week, her employment agreement provides for overtime pay at an extra half-rate for hours worked over 40. This week, she worked 47 hours. Compute the following amounts.

a. The overtime earnings (I entered $79.10, but it was wrong)
b. The total earnings (I entered 1,142.10, but it was wrong)
c. If this was a BELO plan with a pay rate of $23.45 per hour and a maximum of 47 hours, how much would se be paid for 44 hours?

User Elsa Li
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1 Answer

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Answer:

a. $79.17

b. $1142.17

c. $1184.23

Explanation:

The Fair Labor Standards Act (FLSA) has a couple of options for folks who work varying hours. One is a plan for "fluctuating work schedules", and the other is the BELO plan. Each guarantees a minimum wage, but overtime is computed differently under the two different plans.

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a. On the "fluctuating work schedule" plan, the "standard rate" is the fixed salary divided by the actual hours worked (including overtime hours). Here, that is $1063.00/47 = $22.61702... ≈ $22.62. Kari's overtime earnings are the product of her overtime hours (47 -40 = 7) and half the standard rate, $11.31.

overtime earnings = 7 × 11.31 = $79.17 . . . . . or $79.16 if you round properly

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b. Kari's total earnings will be the sum of her fixed salary and her overtime earnings.

total earnings = $1063.00 +79.17 = $1142.17 . . . . or 1142.16 with proper rounding

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c. The BELO plan guarantees pay for 47 hours (the agreed "maximum") even if hours worked is less than 47. The pay for hours over 40 is time-and-a-half. So, pay for 47 hours is equivalent to pay for 40 +7×1.5 = 50.5 hours.

Kari's minimum weekly pay would be ...

$23.45 × 50.5 = $1184.23 . . . . BELO plan pay

Kari would be paid $1184.23 for 44 hours.

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Additional comments

Usually, in calculations of all sorts, you want to avoid rounding any intermediate results. Only the final answer is rounded to the desired precision.

Here, there is the tendency to want to round pay rates to the nearest cent per hour. Doing so adds an extra penny to the OT and total pay calculations in parts A and B. We aren't quite sure what your curriculum materials tell you to do.

In the real world, a payroll department will keep enough significant figures in the hourly rate to make sure the annual pay comes out to the penny. For a 6-figure salary, that's at least 8 significant figures. Here, rounding hourly pay to cents reduces the precision to 4 significant figures.

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About the "fluctuating work schedule" plan: the FLSA requires that the "standard rate" never fall below the applicable minimum wage. Here, the standard rate of $22.62 is well above the federal minimum wage of $7.25 per hour, so it isn't an issue.

User Wilovent
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