How do you calculate overtime pay? Houston Wage & Hour Attorneys

how do you calculate overtime

Experiment with these suggestions to see what works for your team and your business. Get into the habit of following the steps here and you’ll have no problem, regardless of the numbers. Here are the numbers you get when you use this formula (using the same $12 per hour example from the previous section).

  • Last week, Ernie worked an additional 5 hours, ending the workweek with a total of 45 hours.
  • This worker would not meet the weekly overtime threshold of the FLSA, but could be eligible for two hours of overtime pay for the hours worked on Thursday, depending on applicable state labor law.
  • Note that companies can choose to pay overtime based on the weekly work hours agreed upon and not necessarily by a 40-hour work week.
  • With a process like this, employees no longer have to physically be at their place of work to view the schedule.
  • Plus, it makes record-keeping easier, so you can access past payroll information as needed in a few clicks.

When you’re calculating time-and-a-half overtime pay for employees with flexible schedules, the unit of time you want to look at is the seven-day workweek. So, if your business’s pay period is biweekly, break that down into weekly chunks. Hourly employees who work for more than 40 hours over a seven-day timespan must receive overtime. Overtime pay for salaried employees can seem tricky to calculate, but it’s actually fairly simple. One way to do it is to divide their weekly pay by the number of hours they work in a week.

Monitor Labor Costs In Real Time

For example, John earns $12 an hour, worked 48 hours this week, and received a bonus of $20 for perfect attendance. Here’s how to compute his regular pay and time and a half pay that accounts for that bonus. Note that companies can choose to pay overtime based on the weekly work hours agreed upon and not necessarily by a 40-hour work week.

How do you calculate rest day overtime?

The hourly rate for a normal day overtime is equal to 125% of the normal hourly wage of the employee. For a rest day overtime, the rate is 169% of the regular rate. The same goes if the date of the overtime falls on a special holiday.

How overtime is calculated depends on whether the employee is paid hourly or by salary. Further, the calculation for salaried employees differs depending on the number of hours per week the salary is meant to compensate for. The only time overtime pay is given on these days is when it pushes an employee’s hours past 40 hours in that workweek.

When are salaried employees eligible for overtime pay?

Calculating time and a half pay is not a walk in the park, and it can be daunting to understand the exemptions and rules under the FLSA and state-specific regulations. can help take out some of the tedious areas surrounding payroll accuracy. It can be deployed as an app on workers’ smartphones to record overtime hours easily. Geofencing and GPS-tracking are included features that allow manufacturing, construction, and mining companies to optimally track the overtime of workers employed at a remote site. This hardware-less attendance system can track and calculate overtime automatically without any intervention from the managers or supervisors.

how do you calculate overtime

In the workplace, you’re either considered an “exempt” or a “non-exempt” employee based on your specific job duties. Only non-exempt employees are eligible for overtime pay according to the FLSA. The remaining states require overtime pay based only on the number of overtime hours worked in a week. So, if an employee worked 10 hours on Monday, 6 hours on Tuesday, and 8 hours on Wednesday, Thursday, and Friday, their employer wouldn’t owe them overtime pay. Overtime pay is additional pay that’s owed to employees when they work more than the agreed-upon number of hours in their contract, or over full-time. For example, if an employee works 45 hours one week—instead of the standard 40—you may owe them 5 hours of overtime pay.

Calculating Overtime Pay for Salaried Employees

Some states have additional overtime laws that require you to pay an employee overtime after working 8 or 12 hours in a day. In this case, the employee’s salary is intended to compensate for a workweek greater than 40 hours. The calculation is different here because any overtime hours are already partially compensated for by the weekly salary. For the majority of the methods for calculating overtime, you’ll use formula one (the 1.5 overtime multiplier). But let’s see how to calculate overtime using total hours worked and formula two. Before we delve into more details about how to calculate overtime using that overtime pay rate, let’s discuss the second formula you may need.

Construction companies using independent contractors often treat them like employees. Thankfully, there are several ways to reduce your overtime bill (or eliminate it) and fully comply with the law. This guide will take a deeper look into what is time and a half, how to calculate it, and how to avoid costly sanctions that result from miscalculations. All your hourly workforce data in one place, from onboarding to scheduling. This shows you are taking initiative, and if your performance is above average, your boss should be willing to give you more work.