Paying hourly employees in compliance with the Fair Labor Standards Act (FLSA) can be more complicated than it would seem.
The FLSA defines when workers are considered “on the clock” and which employees are exempt from its rules.
State laws can complicate payroll automation. Handling complicated timesheets can be difficult without some form of payroll automation.
Differentiating between double time, overtime, and time and a half is crucial to ensuring accurate payroll. We will begin by defining these pay structures and providing guidance on calculating hourly employee wages properly.
Please remember that, according to the FLSA, a workweek is defined as seven consecutive 24-hour periods. You are not required to maintain the same workweek for every employee group or location; however, once you have selected a workweek, you must document and adhere to it regularly.
The FLSA does not restrict the number of hours per day that an employee aged 16 or older can be required to work.
Double time
Double time is when an employee is paid twice their regular pay rate. So, if you earn $15/hr, you would get $30/hr with double time.
The Fair Labor Standards Act (FLSA) does not cover double time, and unless employers are paying employees in California or have union agreements that require it, they are not required to offer it.
Employers sometimes offer double-time pay to incentivize employees to work unpopular shifts. Depending on employer policy, double time may be paid for working on federal holidays or when hours exceed the normal workweek or workday.
How to calculate the double time
- Did you work more than 12 hours today? If so, you may be entitled to overtime pay.
- Is it correct that you worked seven days in a row during the current pay period? If so,
- If you worked more than 8 hours on the seventh day, then you are entitled to double-time pay for hours over that.
The overtime pay policy in your state, union agreements, and employer policy will determine whether double-time pay is an option for an hourly employee and how it would be calculated. To apply the same rules, workers eligible for double time must convert their salary to an hourly rate.
Overtime
The Fair Labor Standards Act (FLSA) requires nonexempt employees to be paid overtime when they work more than 40 hours in a workweek.
No employee can legally waive their entitlement to overtime pay. If an employee works overtime due to their mistake, the employer cannot require them to make up those hours without providing overtime pay as required by law.
In some states, such as Alaska, California, and Nevada, eligible employees must be paid overtime if they exceed eight hours daily. Other states set different limits based on the type of work employees are doing.
This implies that employers may have to comply with daily or weekly overtime laws. The FLSA only covers workweek total hours, while states may have laws regulating daily hours worked.
Being understaffed can rapidly lead to increased overtime costs, so it is critical for employers to monitor overtime to minimize expenses closely.
How to calculate overtime
- What is the overtime threshold? (8 hours per day or 40 hours per week).
- To calculate your overtime hours, add your total work hours and subtract the appropriate threshold. If the total exceeds 0, those are your overtime hours.
Time and a half
Time and a half refer to an employee’s increased pay rate for working overtime. This means the employee’s hourly rate is increased by 50% for every overtime worked.
Although time and a half pay may initially seem like a significant increase, it may not result in a substantial increase in take-home pay if it causes the employee to move into a higher tax bracket. After taxes are taken out, the employee’s net income may only be slightly higher or even remain the same.
How to calculate time and a Half
To calculate time and a half:
- Add up the hours of overtime = Overtime Total
- Multiply your regular hourly pay rate by 1.5 = Overtime Rate
- Multiply the Overtime Total by the Overtime Rate
Final Thoughts
Some employees may be unclear about what qualifies for overtime or double time or if double time is an option at their workplace. Working on holidays, weekends, or unusual shifts does not necessarily mean that an employee is eligible for double time; total work hours exceeding federal and state thresholds is what determines eligibility.
Letting employees know whether double time is an option can help prevent any confusion.
Overtime is required by law in many workplaces. Employers must carefully track employee hours and follow the complex rules that dictate when overtime pay goes into effect. They are also required to post FLSA posters so that employees clearly understand when they qualify for overtime pay.
