If you have nonexempt employees, you have to pay them overtime, or time and a half, for any hours worked over 40 during the workweek. Learn all about time and a half, who qualifies for overtime, and how to calculate it.
What is time and a half pay?
Again, when an employee works overtime hours, you must pay them time and a half their regular rate of pay. This may be called overtime, overtime rate of pay, or an overtime premium.
How much is time and a half? Time and a half pay is 50% more than an employee’s regular rate of pay. For every hour of overtime an employee works, you must 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. According to the FLSA, you must pay time and a half to employees who work more than 40 hours in a workweek.
But, not all employees receive overtime pay. An employee’s ability to receive time and a half depends on whether they are exempt or nonexempt.
Exempt and nonexempt employees
So, how do you know if an employee is exempt vs. nonexempt? Based on FLSA guidelines, there are a few telltale signs to look out for. Exempt vs. nonexempt varies depending on the following factors:
If the employee is hourly or salaried The salary amount the employee receives The employee’s job duties
FLSA rules apply to nonexempt employees. Exempt employees are exempt from the FLSA.
The main difference between nonexempt and exempt employees is that nonexempt employees can earn overtime pay and exempt employees cannot. Take a look at a breakdown of how they differ below.
Employees are exempt from the FLSA if they:
Make at least $35,568 annually (or $684 per week), Receive a salary, AND Have job duties that are considered exempt
Exempt job duties include high-level responsibilities that directly affect the company’s overall operations, such as executive, administrative, professional, or computer-based duties.
Additionally, if you pay an employee an annual salary of $107,432 or more, they are exempt if they have at least one executive, administrative, or professional job duty.
There is also a test for employees who work in outside sales. If an employee’s primary duty is making sales, they are exempt. The employee must also regularly perform work away from your business. They do not have to meet salary exemption requirements to be exempt.
On the flip side, nonexempt employees:
Do not make at least $35,568 annually Are not salaried and/or Do not have exempt job duties (e.g., administrative)
If you have nonexempt employees, you must pay them time and a half (1.5 times) for any hours worked over 40 a week.
There’s a common misconception that paying an employee a salary means they’re exempt from overtime wages. You can have salaried nonexempt employees who are eligible for overtime pay.
Your state may have stricter overtime laws than the FLSA. Check with your state to learn about the overtime laws you need to follow.
How to calculate time and a half
Again, pay nonexempt employees time and a half for any overtime hours they work.
A good chunk of nonexempt employees receive hourly wagesContinue reading