An employee earning $30 an hour who is paid $45 for an overtime hour has $15 of that hour excluded, leaving the $30 base in the audit basis. Most states allow this; a few do not.
The exclusion is only available when payroll records separate overtime from regular wages. A report showing a single combined gross figure gives an auditor nothing to subtract, and the full amount is rated.
Why it matters at audit
This is a reporting format decision, not an accounting one. The same payroll produces different premium depending on which columns the report was run with.