If you are an employee who works overtime, you may be entitled to overtime pay, which is often called "time and a half." However, there are some instances when time and a half does not apply. In this article, we provide a short explanation of what time-and-a-half pay is and whether it may apply to your situation.
What is time and a half?
"Time and a half" refers to the rate of pay most employees are entitled to if they work more than 40 hours a week. How it works is that an employer pays you your normal hourly rate for the first 40 hours worked per week, which is also typically the agreement as stated on your work contract. For any hours you work beyond the required 40-hour workweek, however, you may be entitled to receive your hourly rate plus 50%.
The Fair Labor Standards Act regulates standards about minimum wages and overtime pay. According to the FLSA, employees cannot claim time and a half for working on holidays, such as Labor Day, Easter, New Year's Day and Christmas or weekends, except if they work overtime these days.
There are no laws that limit the number of hours that employees aged 16 and older may work in any given workweek, as long as their employers give them overtime pay for hours that exceed the 40-hour workweek. According to the FLSA, a workweek is a fixed and reoccurring period of 168 hours or seven consecutive days, and it does not need to coincide with the calendar week. Your employer should pay you for any overtime you have worked during that period.
Do all employers need to pay overtime?
Not all employers are required to give extra overtime compensation. If your employer's business brings in less than $500,000 in annual sales, they may not have to pay overtime. However, if the company's transactions involve the production, movement or selling of goods for interstate commerce, the employer may still need to pay you overtime.
Also, the FLSA covers the following enterprises, regardless of their turnover or whether they engage in interstate commerce:
- Institutions that take care of the elderly or disabled
- All preschools, elementary and secondary schools
- Federal, state and local government agencies
In the case that your employer's company is so small or local that the FLSA does not cover it, you may still qualify for overtime pay according to your state's overtime law, so be sure to check with your state labor department.
When do employees receive time and a half?
Although a large percentage of employees qualify for time and a half, in which case they are nonexempt employees, some employees are exempt; that is, their employers do not need to pay them for the hours they work overtime. For instance, some professionals whose jobs require frequent overtime and long shift work, such as doctors, policemen, firefighters and nurses, may be exempt from earning time and a half.
Apart from such professions, the FLSA recognizes a few broad categories of workers that may be exempt from overtime pay. These are administrative, executive and professional employees, STEM (science, technology, engineering and math) employees and salespeople. However, they can only be exempt if:
- Their employers pay them a fixed salary and not on an hourly basis
- They earn a minimum of $455 per week
- In the case of executive exemption, they are managers of an enterprise, department or subdivision and have the power to hire or fire other employees
- In the case of administrative exemption, their work involves the use of independent judgment and discretion concerning significant business operations
- In the case of professional exemption, they are experts in a specialized scientific or educational field like computer analytics, teaching or engineering
An employee can also become exempt from overtime pay by agreeing on a fixed salary with an employer for a job that requires regular overtime work. However, although some employees are exempt because their employers pay them a salary, it is important to note that many salaried employees do qualify for overtime pay.
Apart from the broad categories of workers who may be exempt, here is a list of other employees who might not qualify for overtime pay:
- Employees who work at seasonal amusement or recreational establishments
- Switchboard operators
- Seafarers who work on foreign or American vessels
- Newspaper delivery employees
- Employees of fishing operations
- Employees who work for commission in the retail or service industries
- Casual babysitters
- Boat, truck, trailer, auto and aircraft salespeople who work for non-manufacturing companies
- Taxi drivers and railroad and air carrier employees
- Domestic workers who live at their employers' residences
- News editors and announcers at some broadcasting stations
This list is not comprehensive, so if you are not sure whether you are exempt, you should consult the FLSA, as it provides all the necessary information.
How to calculate time and a half
If you qualify for time-and-a-half pay, this means that for every hour you work overtime you should receive your normal hourly rate plus 50%. To help you calculate what you should be earning if you work overtime, here is an example:
Mary is a nonexempt employee who receives an hourly rate of $10. According to her contract, she has a 40-hour workweek and receives her payment every month. In October, Mary worked 180 hours, and her employer calculates her pay in the following way:
Mary's regular pay: 40 hours x 4 weeks = 160 hours
160 hours x $10 = $1,600 per month
Mary's overtime pay: Mary worked an extra 20 hours above her normal 40-hour workweek. To calculate these extra hours, her employer first needs to ascertain what her time-and-a-half pay should be. To do this, she multiplies Mary's hourly rate of $10 by 1.5:
$10 x 1.5 = $15
Mary's overtime rate is $15 per hour. To calculate what Mary earned for the overtime work she did, her employer has to multiply the 20 hours by the time-and-a-half rate of $15:
20 hours x $15 = $300
Mary's gross salary for October: Mary's employer adds the $300 overtime pay to her regular monthly salary of $1,600, which equals $1,900.
$1,600 + $300 = $1,900