Time and a half an employee’s regular rate of pay for each hour worked over 40 in a workweek is the federal overtime pay rate for employees who are nonexempt under the Fair Labor Standards Act (FLSA). It’s also the overtime rate in many states with overtime requirements, though some may entitle workers to double time or require overtime pay in other circumstances. In all such cases, knowing how to calculate overtime is essential to payroll compliance.
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What is overtime?
The FLSA requires nonexempt employees to be paid one and one-half times their regular rate of pay for every hour worked in excess of a 40-hour workweek. For this purpose, the regular rate of pay includes not only an employee’s hourly rate, but also the value of nondiscretionary bonuses, shift differentials and certain other forms of compensation.
Employers must also understand that a workweek, according to the FLSA, is seven consecutive 24-hour periods. It need not coincide with a calendar week, but must stand alone. Therefore, employers may not average an employee’s time worked over two or more workweeks when calculating overtime pay. They generally must pay the overtime earned in a particular workweek on the regular payday for the pay period in which wages were earned.
Who qualifies for overtime?
Nonexempt employees who work for businesses that are considered enterprises under the FLSA are entitled to time-and-a-half overtime pay when they work more than 40 hours in a workweek. For this purpose, an enterprise is an organization that employs at least two people and:
- Has annual revenue of at least $500,000 – or –
- Provides medical or nursing care to residents – or –
- Is a hospital, school or preschool, or government agency
In addition, individuals who don’t work for an enterprise, but are engaged in interstate commerce or domestic service, may still be subject to the FLSA.
Certain employees who earn a salary that exceeds the Department of Labor threshold and work in certain professions – such as administrative, professional, computer or outside sales capacities – may be exempt from the FLSA. Each role must pass specific duty tests to qualify for an exemption. Other exemptions exist, such as those for farmworkers and certain seasonal or recreational businesses. The FLSA narrowly defines exemptions, so employers should refer to the DOL for more specific guidelines.
How to calculate overtime under the FLSA
Calculating overtime pay in accordance with the FLSA is a two-step calculation:
- Multiply the regular rate of pay by time and a half (1.5) to get the overtime rate
- Multiply the overtime rate by the amount of overtime hours worked
This basic calculation varies slightly depending on whether the employee is paid hourly wages or a salary. With salaried employees, employers will have the additional step of determining the regular rate of pay.
Example: How does time and a half work for hourly employees?
A nonexempt employee has a regular hourly pay rate of $12 per hour and works five hours of overtime during a given workweek. What is this individual’s total gross compensation?
- $12 x 40 hours = $480 base pay
- $12 x 1.5 (time and a half) = $18 overtime rate
- $18 x 5 hours = $90 overtime pay
- $480 + $90 = $130 total gross pay
Example: How does time and a half work for salaried employees
A nonexempt salaried employee works an agreed-upon 40 hours per week and earns an annual salary of $27,000. What is this individual’s total gross pay for a 47-hour workweek?
- $27,000 / 52 weeks = $519.23 weekly salary
- $519.23 / 40 hours = $12.98 regular rate of pay
- $12.98 x 1.5 (time and a half) = $19.47 overtime rate
- $19.47 x 7 hours = $136.29 overtime pay
- $519.23 + $136.29 = $655.52 total gross pay
Frequently asked questions about overtime
When does overtime apply?
Under federal rules, time-and-a-half overtime rates apply when a nonexempt employee works more than 40 hours in a single workweek. Individual states, however, may have different overtime requirements. For instance, overtime may accrue by the workday rather than the workweek or double-time rates may apply.
How do I calculate overtime plus my standard salary?
- Determine the regular rate of pay
- Multiply the regular rate by 1.5 to get the overtime rate
- Multiply the time and half rate by the overtime hours worked
- Add the result to the weekly salary
What is the overtime rate for $20 an hour?
$20 x 1.5 (time and a half) = $30 overtime rate per hour
What is the overtime rate for $18 an hour?
$18 x 1.5 (time and a half) = $27 overtime rate per hour
What is the overtime rate for $17 an hour?
$17 x 1.5 (time and a half) = $25.5 overtime rate per hour
What is the overtime rate for $16 an hour?
$16 x 1.5 (time and a half) = $24 overtime rate per hour
What is the overtime rate for $15 an hour?
$15 x 1.5 (time and a half) = $22.5 overtime rate per hour
Is overtime required for working on a holiday?
The FLSA does not require premium pay for working on a holiday. Under federal law, an employee only receives time-and-a-half or overtime pay on a holiday if the hours worked that day exceed 40 for the workweek. Note that states may have different rules regarding holiday pay.
This article is intended to be used as a starting point in time and a half and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.