Time and a Half Pay– What Is It? And How Is It Calculated?

September 15, 2022
Time and a Half Pay– What Is It? And How Is It Calculated?

Table Of Contents

What Is Time and a Half?

Time and a half refers to an increased rate of hourly pay that all hourly workers in the US, unless exempt, must receive at the rate of one-and-a-half times their normal hourly wages. While being very easy to calculate for hourly workers, salaried workers may find time and a half somewhat difficult to calculate.

In simpler terms, it means that if you have worked overtime for a certain number of hours or exceeded the 40-hour workweek, your hourly pay for the extra hours you have worked will be one-and-a-half times your standard hourly rate.

So, an employee who works with a standard rate of $20 per hour will receive $30 (hour and a half) for each hour that exceeds their usual hours, or 40 hours.

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Companies usually pay it to incentivize workers to work during holidays, weekends, or at other times when they may not wish to do so. And depending on the company’s overtime policy, certain days, such as religious holidays, may be eligible for double-time rather than time and a half.

Overtime pay policies may differ according to the specific company. Still, in almost all cases, hourly workers in the US will either receive double pay per every extra hour worked, known as double time or will be paid based on time-and-a-half.

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Time and a Half Rules for Weekends, Holidays, and Vacations?

How Does Time and a Half Work on Holidays?

The conditions for the eligibility of time and a half pay are set in the Fair Labor Standards Act. According to it, “Employees covered by the Act must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.”

Overtime Pay Rules for Holidays

However, there is no added clause in the FLSA for weekends and holidays. This means that employees over the age of 16 do not necessarily have to receive overtime pay for working on weekends, holidays, or their usual rest days unless they work overtime. But it must also be added that it is a well-established standard for most companies in the US to pay overtime on these days.

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Exempt vs Nonexempt

Exemption Rules for Time and a Half

Certain types of employees are separated as exempt under the FLSA and, therefore, not entitled to overtime pay. For exempt employees, overtime pay will depend on their state’s additional labor standards laws and the company’s overtime payment policy.

This means that some employees exempt from overtime pay, as stated in FLSA, can still receive this, and more depending on which state the employee works in and their company’s preferences on overtime pay.

In addition, it must also be mentioned that regarding this, practice seems to differ from theory. You see, overtime pay as a concept has been a part of our work culture for a long time. And not only that, but as mentioned before, it is a great incentive for many employees. This has led many companies to support overtime pay even if their state does not force them to do so.

Sometimes, overtime pay may be included within the agreed-upon monthly salary, particularly for salaried workers. However, in that case, if the employee is consistently being asked to work overtime, they can use this to negotiate a raise.

An employee’s exemption status depends on various factors aside from those outlined in the FLSA. Again, most states have additional clauses on exemption, and many workers, such as interns, workers-in-training, and foreign workers, are usually subject to different regulations.

However, as a rule of thumb, employees are, in most cases, exempt from overtime pay if the following applies to their position:

  • They receive a monthly salary rather than payment based on working hours,
  • Their position entails high-level responsibilities which can directly affect the company’s overall operations (executive, administrative, or computer-based duties),
  • They make at least $35,568 per annum (or $684 per week).

Additionally, employees within the sales department whose primary responsibilities include making sales are also exempt from the FLSA.

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How to Calculate Time and a Half

How Much Is Time and a Half?

The equation to calculate time and a half rate is quite simple. Still, it must also be noted that when doing payroll calculations, there are different factors to consider for hourly employees and salaried employees.

Time-and-a-half rate = hourly rate x 1.5

Employee Overtime for Hourly Workers

For hourly workers, payrolls can be calculated with the following steps:

-Calculate how many extra hours a particular hourly worker has worked in that particular payment interval and multiply them by 1.5 times the standard rate.

- If there are also extra hours that are subject to double time, separate these and multiply them by twice the standard rate.

-Calculate the grand total of the number of hours the hourly worker has worked under the standard time agreement and multiply them by the regular rate.

-    Add together the employee’s standard pay and overtime pay.

Employee Overtime for Salaried Workers - Based On Gross Pay

However, for non-exempt salaried workers, this process is a bit trickier. Like those in marketing and sales, many positions involve tasks where measuring usual working hours may be somewhat tricky. But for these types of workers, the following can be used to calculate time and a half pay:

-    Calculate the employee’s standard hourly rate by dividing their salary by how many hours that employee typically works. Then, find the time and a half rate by multiplying the standard hourly rate by 1.5.

-    For each overtime hour the employee has worked, multiply their hourly rate from the previous step by the number of extra hours.

-    To calculate the employee’s total wages, add the overtime pay with the standard payment.

For payroll calculations, this process, especially for salaried workers, may be better calculated with an employee overtime calculator such as Omnicalculator and Quickhr Overtime Pay Calculator.


How Do Bonuses and Commissions Affect Overtime Pay?

For employees subject to performance bonuses and commissions, these must also be factored in when calculating overtime pay.

For instance, when calculating the overtime pay rate of an employee whose standard hourly rate is $15 but also receives a performance bonus equivalent to $5 per hour, the time and a half rate for that employee in that particular period must be calculated with the total of standard hourly rate plus bonuses. So, for this employee, the time and a half rate would be 1.5($15 + $5) = $30.

Calculate time and a half pay

Final Thoughts - Employee Overtime Pay Rate

While on the subject of time. Working longer hours can positively affect your overall output, but did you know that it may also be very detrimental to your social life, productivity, and physical and mental health?

According to the World Health Organization, “Long working hours led to 745 000 deaths from stroke and ischemic heart disease in 2016, a 29 percent increase since 2000”. The numbers point to severe consequences of working long hours, a phenomenon that many of us may find ourselves facing.

But, In the modern workplace, many companies are beginning to shift towards encouraging employees not to sacrifice even more of their hours but to utilize productivity-boosting methods instead.

Because, with the aid of technology such as our AI-driven time management tool, you can finish all your tasks successfully and still have time to dedicate to the more essential things in life. If you’re constantly finding yourself staying at work for longer hours to finish your tasks, time management may be a tool worth considering. It’ll transform your work life.

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