Paying hourly employees is much more complicated than it would seem.
The Fair Labor Standards Act (FLSA) is your guide—it defines when workers are determined to be on the clock, and which employees are exempt from FLSA rules . But state laws can add another layer of complexity on top of that. That makes handling complicated timesheets very difficult without some form of payroll automation .
Knowing the difference between double time, overtime, and time and a half—and when to pay each—is necessary to get payroll correct. We’ll start by defining what these pay structures are, and the best way to handle it all when it comes to calculating hourly employee wages.
Before we get started, keep in mind that according to the FLSA, a workweek is considered to be seven consecutive 24-hour periods. You don’t have to have the same workweek for every employee group or location, but it does need to be documented and regular once you’ve selected it.
The FLSA doesn’t limit how many hours a day an employee over the age of 16 can be required to work.
Sometimes known as “double overtime,” double time is paying an employee twice their normal rate of pay. If you earn $15/hr, you’ll get $30/hr with double time.
Here’s the thing: the FLSA doesn’t cover double time, and unless employers are paying employees in California or have union agreements that require it, they aren’t required to offer it.
Employers sometimes offer double time pay in order to fill unpopular shifts. Double time is sometimes paid for working on federal holidays or when hours exceed the normal workweek or workday, depending on employer policy.
How to calculate double time
Employer-offered double time calculations will be unique to that employer. In California, the only state in the U.S. with actual double time laws, the rules can be broken down as follows:
- Did you work 12 hours in a day? If yes, you should get double time for hours over that.
- Did you work 7 consecutive days in the current pay period? If yes…
- Did you work more than 8 hours on that seventh day? If yes, then you should get double time pay for hours over that.
Again, the state you live in, union agreements, and employer policy determines whether double time pay is an option for an hourly employee, as well as how it would be calculated.
Salaried workers who are eligible for double time have to convert their salary down to an hourly rate in order to apply the same rules.
The FLSA requires that nonexempt employees (i.e. generally those who are not salaried, with some exceptions) are paid overtime when they work more than 40 hours in a workweek.
By law, no employee can waive overtime pay. Even if overtime occurs due to employee error, no employer can demand hours be made up without offering eligible overtime pay.
In some states, like Alaska, California, and Nevada, eligible employees must be paid overtime if they exceed eight hours in a day. Other states set different limits based on the kind of work employees are doing.
What this means is that employers may have daily or weekly overtime laws to follow. The FLSA only addresses workweek total hours, while states may address daily totals. It’s easy to see how being short staffed can quickly lead to exploding overtime costs, so for employers, it’s important to stay on top of overtime to reduce overtime expenses .
How to calculate overtime
To find out how overtime is calculated , determine if you’re dealing with daily or weekly overtime.
- What is the threshold? (8 hours per day or 40 hours per week).
- Add up your total work hours.
- Subtract the appropriate threshold from that total.
- If the number exceeds 0, those are your overtime hours.
Time and a half
Time and a half is in regards to the specific amount of pay someone would receive when they work overtime. It means a 50% increase in an employee’s rate of pay for every hour they work overtime.
Time and a half pay won’t necessarily increase an employee’s net income by much if it causes them to move into a higher tax bracket. Take-home pay might seem nearly the same or only incrementally higher if more taxes are taken out.
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 Overtime Total by Overtime Rate
Some employees may be confused as to what qualifies for overtime or double time, or if double time is even an option where they work. Working holidays, weekends, or unusual shifts doesn’t check the box; total work hours exceeding federal and state thresholds do.
It’s wise to let employees know whether double time is on the table to prevent any confusion.
Overtime, on the other hand, is required everywhere. The employer must track employee hours and follow the complicated rules that dictate when these increased labor costs go into effect. They are also required to post FLSA posters so that employees better understand when they qualify for overtime.
It’s easy to see how labor costs can get out of control if you’re short staffed, if you’re not tracking employee hours closely, or if you let your shifts get away from you. Having fewer employees to do more work isn’t a long-term solution when you keep these pay structures in mind.
This is a lot to manage if you’re the payroll or employee manager.
Manually calculating these pay structures for multiple shifts and multiple employees—all while trying to schedule shifts to avoid runaway overtime costs—is difficult to do error-free.
鲸鱼电竞 automates much of this so that employees who hit overtime hours are automatically calculated at the correct rate. This is easier on you, more fair to the employee, and also makes it easy to track labor costs and overtime issues in real time. Overtime data is readily available; you can see which employees or shifts tend to accrue overtime and can make adjustments to reduce the problem. You can avoid fair workweek issues while still keeping labor costs under control.
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