What Is Time And A Half and How To Get It Right

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One of the most important parts of maintaining a business is making sure the employee payroll is taken care of. In order to do this, making sense of the jargon that comes with it is also important. Understanding what time and a half means is part of this. 

Time and half essentially means overtime pay. This is the extra pay that is owed to any employees that have worked more than the contracted 40 hours. Typical overtime pay is paid at half the standard hourly rate. 

Today, we will take a look at what time and a half is in more detail as well as how to work it out. 

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Time and a Half 

This is the amount of money employees are owed as an overtime rate. These requirements have been set by the FLSA (Fair Labor Standards Act). 

The overtime rate is set at 1.5x the amount of the worker’s usual hourly rate of pay. This means that your employee is owed their standard rate of pay plus 50%. 

For example, if an employee is making $16 hourly you would need to pay them 1.5 x $16 = $24 for each extra hour worked. 

This type of pay is only applicable to any employee that is working additional hours on top of the 40 hour work week. 

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When Do You Need to Pay It?

All employees that are not exempt from this pay under the FLSA will need to be reimbursed for their overtime work at time and a half. If an employer does not comply then they can end up with a huge fine as well as a lawsuit on their hands. They may also need to give employees back pay on top of legal fees. 

In order to know who is eligible for this payment then you need to understand who is exempt and who is not. 

 

Exempt Employees 

These employees are not eligible to receive time and a half. These workers are usually paid on a salary rather than an hourly rate. They also have jobs that are specifically exempt from this pay determined by the FLSA. Some of these jobs include high-level business management in various sectors. 

If an employee's annual pay is more than £35,568, then they are also exempt from overtime pay. On top of this, if there are any sales executives that are working away from the business location then they are also considered to be exempt.

There are certain job roles that receive hourly pay that are exempt from overtime pay. These mostly include roles in the food industry such as agricultural workers and truck drivers. 

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Non-Exempt Workers 

These are the workers that are included in the FLSA. They will need to be paid time and a half. 

You will usually find that they are employees that are paid hourly. But, it is not unheard of to have non-exempt salaried workers. 

Their salary must be below $35,568. As well as this, there are certain job roles that qualify for this pay. These include most high-level administrative and executive positions

There are some states that have overtime pay laws that have higher potency than the federal laws. The federal law is a minimum requirement and legal framework for overtime pay. You must ensure that you meet the state requirements on top of the FLSA law. 

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How to Work Out How Much Time and a Half to Pay

Employers will owe time and a half to all employees that are not exempt. This payment should be 1.5x their usual hourly rate. 

The way that you calculate this will be different depending on whether your employee is salaried or paid hourly. 

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Overtime Pay for Workers Paid Hourly

Calculating for this experience is the most simplest of them all. You must first determine what their usual hourly rate is and then multiply this by 1.5. 

Once you have this rate, you simply need to multiply it by the number of hours that they worked overtime in that instance. After you have this amount you can add it onto their regular weekly payment. That’s it! 

For example, if you have an employee that worked 46 hours in one work week then you would need to reimburse them for 6 hours of overtime. If their wage is $14 hourly then his overtime pay rate would be $14 x 1.5 = $21. 

Because they worked 6 extra hours, you would need to calculate this as $21 x 6 hours = $126. Their standard weekly rate would usually be $14 x 40 hours = $560. So, their total weekly payment including overtime would be $560 + $126 = $686. 

 

Overtime Pay for Workers on a Salary

In order to calculate the overtime pay for salaried employees you will need to make sure you understand what type of salary they are receiving. 

If their number of work hours are fixed then you must calculate their overtime this way: 

  • Work out what their hourly rate would be. To do this you will need to divide their weekly salary by the fixed amount of hours they’re contracted to work. 

  • Multiply this hourly rate by the amount of hours they work in a week. 

  • In order to work out their overtime pay rate you will need to multiply their regular rate by 1.5 (time and a half). 

  • Multiply their overtime rate by how many hours they worked overtime that week.

  • Add their typical weekly payment to the overtime pay rate. 

If the work week for your salaried employee fluctuates then this will be calculated differently. You will need to follow the steps above, except you will need to do it on a weekly basis to work out what their hourly rate would be because of the work hour fluctuations. 

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Conclusion 

It is important to be comfortable with how to calculate and manage overtime pay for your employees. This payment ensures that you are giving your employees a fair pay as well as making sure that as a company you are complying with the FLSA

When starting out, calculating time and a half for your employees can be quite the challenge. But, once you get the hang of it, you will be able to do it without a second thought. Make sure to keep on top of your payroll to avoid disaster and to make sure each of your employees are being paid fairly for the work they have done. 

We hope this information has helped you understand more about what time and a half is and how to apply it. 

Pay stubs take only moments to generate, and they take roughly the same amount of time to misplace. If you receive regular paychecks from an employer, make sure to store them in a safe place.

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What Is Time And A Half and How To Get It Right
Samantha Clark

A Warrington College of Business graduate, Samantha handles all client relations with our top-tier partners. Read More

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