How To Calculate Time and a Half

By Indeed Editorial Team

March 30, 2021

Calculating payroll at large companies is a task that requires many different formulas. If you work in human resources and need to determine an employee's payroll, you can consider factors like holidays, job responsibilities, benefits, hours, how much time off they took during that pay period and what deductions apply. One additional factor to consider is whether they worked any overtime hours, in which case it's important to understand how to calculate time and a half. In this article, we discuss time and a half and explain how to calculate it when submitting payroll.

Related: What Is Overtime Pay?

What is time and a half?

Time and a half is the extra compensation nonexempt employees get when they work additional hours outside of the typical 40-hour workweek. This is also called overtime, and it comes at an increased rate of pay. While the rate of overtime varies from company to company, the term "time and a half" refers to a common policy where companies offer 1.5 times an employee's hourly wage for each additional hour they work.

Time and a half is essentially an extra 50% more than the employee's standard hourly pay rate. For each extra hour an employee works outside of their normal 40-hour week, companies that offer time and a half must pay the employee's regular rate plus half of that. This practice means that the companies pay more for additional labor, but it also incentivizes an employee's commitment and hard work.

How to calculate time and a half

You can calculate time and a half by multiplying an employee's standard hourly pay rate by 1.5. Here is the formula for calculating time and a half:

Time and a half = standard hourly rate x 1.5

This equation gives you the hourly rate of pay for non-exempt employees who work for more than 40 hours per week. However, when doing payroll calculations, it is important to remember that there are separate processes for calculating time and a half for hourly and salaried employees.

Calculating time and a half for hourly employees

For hourly employees, you can calculate time and a half by using the following steps:

  1. Calculate the standard hourly rate of the employee.

  2. Find the time and a half rate by multiplying the standard hourly rate by 1.5.

  3. Multiply the time and a half rate by the number of overtime hours the employee worked to find the overtime wages due.

  4. To calculate the employee's total wages for that pay period, add together the employee's standard wages and their overtime wages.

Calculating time and a half for salaried employees

For non-exempt salaried employees who work a fixed set of hours, you can calculate time and a half by following these steps:

  1. Calculate the employee's standard hourly rate of pay by dividing their weekly salary by the number of hours they typically work.

  2. Find the time and a half rate by multiplying the standard hourly rate by 1.5.

  3. Multiply the time and a half rate by the number of overtime hours the employee worked to find the overtime wages due.

  4. To calculate the employee's total wages for that pay period, add together the employee's standard wages (for a two-week pay period, double the weekly salary) and their overtime wages.

Related: What Is Time and a Half? Definition and How To Calculate It

Examples of calculating time and a half

Using the equation and steps above, you can calculate time and a half for an employee. Here are two examples of how to calculate time and a half:

Hourly employee example

Let's say that your company has a nonexempt hourly employee named Jane who makes $15 per hour. In a regular 40-hour workweek, Jane makes $600 per week. When Jane works any time over 40 hours, she gets paid time and a half. This week, she worked 50 hours total, meaning she worked 10 hours of overtime. Using the equation above, here's how to calculate Jane's time and a half pay rate:

$22.50 = $15 x 1.5

Jane's time and a half pay rate is therefore $22.50 per overtime hour. To calculate what Jane is owed for her overtime, multiply her time and a half rate by the number of hours she worked overtime:

$225 = $22.50 x 10 hours

This week, because she worked 10 hours overtime, Jane is owed $225 in addition to her standard compensation. You can calculate Jane's total wages for the week by adding her overtime wages ($225) to her standard weekly wages ($600) for a total of $825 in wages.

Salaried employee example

If Jane were a salaried employee with the same hourly rate ($15 per hour), she would make $31,200 per year. According to the Fair Labor Standards Act (FLSA), this would make her a non-exempt employee because her annual income falls under $35,568 annually. Typically, only non-exempt salaried workers are eligible for overtime pay.

Let's say that Jane, who normally only works 40 hours per week, worked 55 hours this week to help her team finish an important project. This would mean that Jane worked 15 hours of overtime this week. To calculate Jane's weekly pay rate, start by dividing her annual salary by the total number of weeks in a year to get her weekly salary:

$600 = $31,200 / 52

Using $600 as Jane's weekly pay rate and dividing it by 40, you can find her standard hourly pay rate:

$15 = $600 / 40

Once you have Jane's standard hourly pay rate, you can use the equation provided above to calculate her time and a half pay rate:

$22.50 = $15 x 1.5

Jane's time and a half pay rate is $22.50 per overtime hour. To calculate what Jane is owed for her overtime, you can multiply her time and a half rate by the number of hours she worked overtime:

$337.50 = $22.50 x 15 hours

This week, because Jane worked 15 hours overtime, she is owed $337.50 in addition to her standard compensation. Now you can calculate Jane's total wages for the week by adding her overtime wages ($337.50) to her standard weekly wages ($600) for a total of $937.50 in wages.

Other common overtime rates

The FLSA requires that companies pay a minimum overtime rate of one and a half their standard hourly rate. This means that time and a half is the baseline amount that companies need to pay to employees who work overtime.

Some companies choose to pay their employees more than the minimum rate of time and a half. This can help further incentivize overtime work. Double time is one other common overtime rate. You can calculate double time by simply doubling an employee's standard hourly rate or multiplying it by two.

Other companies choose to begin counting overtime at a lower hour-per-week threshold than 40 hours. For instance, if an employee's standard work schedule is only 37 hours per week, their employer can choose to count any additional work hours over 37 as overtime, not just those that exceed 40 hours.

Another common overtime rate is called holiday pay. This occurs when employees work on federal holidays. The FSLA does not require companies to give time off for federal holidays (paid or unpaid), nor does it require organizations to pay extra to employees who work on federal holidays. Despite this, it is common practice for employers to offer holiday pay, which is typically more than an employee's standard hourly rate. The premium paid for holiday pay is up to the employer.

Read more: Double-Time Pay: What It Is and How To Calculate It

When do companies need to offer time and a half?

A company that requires or allows an employee to work more than their normal weekly hours is responsible for paying that employee overtime compensation. In the United States, federal and state laws mandate that the Fair Labor Standards Act covers all non-exempt employees. This means that any employee who works more than 40 hours per week qualifies for at least one and a half times their standard hourly rate.

Some states, like California, have enacted daily overtime standards to ensure that nonexempt employees are compensated fairly for service that extends outside of the typical eight-hour workday. So, with this law, any employee who works more than eight hours per day would qualify for time and a half, even if they work 40 hours per week or less.

Some exceptions to overtime apply to individuals like firefighters, police officers, other employees of public agencies and those who work for hospitals or nursing homes. Even further, employers are not mandated to pay overtime for weekend or night work unless those hours surpass the 40-hour workweek standard. Because there are many discrepancies, exceptions and differences across the country regarding payroll, it is important to fully understand all national and state laws.

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