How and what is time and a half?, simply put Time and a half is when an employee works overtime hours, and you must pay them time and a half. It is also known as overtime premium or the overtime rate of pay. Generally, when employees work their set of hours and receive a regular rate of pay, it is not time and a half. However, when it happens that an employee happens to work overtime, you as an employer are required to pay a higher rate of pay which is known as time and a half.
For employers, time and a half mean that they will be providing more to payroll, as well as also giving acknowledgment of the value of their employees’ time as well as incentivizing hard work.
How Time and a Half Works
Time-and-a-half pay is 50% more than an employee’s regular rate of pay. Now for every hour of overtime an employee works, you are to give them their regular rate of pay plus half of that. To calculate an employee’s overtime rate of pay, multiply their regular rate by 1.5.
The Fair Labor Standards Act (FLSA) regulates overtime and overtime wages. According to the Act, employers are to pay time and a half to employees who work more than 40 hours in a workweek.
For employees who are exempted from the overtime premium, you do not have to pay time and a half for overtime hours.
However, note that it is the FLSA that determines which employees are exempt from overtime and not the employer.
Now, there are certain requirements employees must meet in order to be considered exempt:
- You must pay the employee a salary
- The employee must be paid at least $35,568 per year ($684 per week)
- The employee must have executive, administrative, or professional duties. The FLSA has information on what duties exempt an employee.
How to Calculate Times and a Half
Here is how Times and a Half is calculated:
Times and a Half Rate = Hourly Rate × 1.5
If an employee earns $20 hourly during a 40-hour workweek. Their times and a half pay would be $20 × 1.5 for a total of $30 an hour.
When Does Times and a Half Apply?
- When an employee exceeds 40 hours during a workweek.
- Some states have laws that require times and a halfs for employees who work for more than 8 hours.
- Working on holidays is not acknowledged as working overtime. This includes bank holidays like Labor Day, Independence Day, Easter, Memorial Day, New Year’s Day, and Christmas.
- Company policy must be issued consistently without discrimination in regard to religious holidays.
- Giving holiday off, can help in establishing more amicable relationships between staff, and may foster a better work-life balance for employees.