Hourly Rate Equation Continuous Hourly Rate Equation

If you've ever worked overtime hours in an hourly job, it's likely you've seen the term "time and a half," which refers to the extra money you'll make during those hours. Knowing how to calculate time and a half is a good skill to have whether you work in payroll or are simply trying to estimate how much you'll make from working overtime.

In this article, we'll teach you how to calculate time and a half pay for both hourly and salaried employees. We'll also share some of the most common time and a half policies and the differences between exempt and non-exempt employees.

Key Takeaways

• Time and a half pay is simply 1.5 times your normal, non-overtime salary.

• Only non-exempt employees can qualify for time and a half pay.

• Companies often pay time and a half when non-exempt employees work more than 40 hours a week, on holidays, or on weekends.

What Is Time and a Half?

Time and a half is a form of overtime that pays employees extra compensation. This can be the cause of additional hours worked outside of a 40-hour workweek or an incentive provided for weekend or holiday work.

Of course, the instances where time and a half are given can vary significantly from company to company. Therefore, "time and a half" can often refer to specific company policies that offer 1.5 times an employee's hourly wage for certain circumstances.

Essentially, time and a half provide an extra 50% more than the employee's standard hourly pay rate. Time and a half policies reward employees for working extra hours or unwanted shifts at the cost of a higher labor price tag for employers.

How to Calculate Time and a Half: The Basics

Given that time and a half pays employees 1.5 times their standard hourly pay, calculating it is actually rather simple. Here is the basic formula for calculating time and a half:

Time and a half = standard hourly rate × 1.5

This equation gives you the time and a half-hourly rate for non-exempt employees. This higher rate always applies to employees who work for more than 40 hours in any workweek.

However, it is important to note that this is only the first piece of the puzzle, as payroll calculations will vary based on whether you're calculating for an hourly or salaried employee.

Calculating Time and a Half for Hourly Employees

If you're paid hourly, you can follow a few steps to calculate your time and a half pay. Of course, you first need to know your standard salary, which is your hourly wage.

1. Multiply your standard salary by 1.5 to find the time and a half rate (standard salary × 1.5 = time and a half rate)

2. Multiply your time and a half rate by the number of extra hours you worked to find overtime wages due. Don't include any hours that fall below the 40-hour mark. (time and a half rate × overtime hours = overtime wages due)

3. To figure out your total wages due during that pay period, add together your standard wages and your overtime wages. (standard wages + overtime wages = total wages)

Hourly Time and a Half Calculation Example

John is a non-exempt hourly employee who earns $17.50 per hour, who wants to know how much time and a half pay he earned last week. During that week, he worked a total of 50 hours (40 regular hours + 10 overtime hours).

Let's calculate his time and a half pay:

1. Multiply John's standard pay of $17.50 by 1.5 to find the time and a half rate ($17.50 × 1.5 = $26.25)

2. Multiply $26.25 by the ten extra hours worked to find overtime wages due. ($26.25 × 10 = $262.50)

Therefore, John earned an extra $262.50 through his time and a half pay.

Though, if we want to find out how much John earned overall, we need to follow the third step.

3. Multiply John's standard pay of $17.50 by his 40 hours worked to find his standard weekly wages ($17.50 × 40 = $700)

4. Now we just have to add his standard wages and time and a half wages together. ($700 + $262.50 = $962.5)

Calculating Time and a Half for Salaried Employees

Generally speaking, salaried employees can be divided into two categories: salaried with fixed hours and salaried with all hours worked. Let's start with the steps for salaried employees with fixed hours:

Fixed Hours Salary Time and a Half Calculation Steps

1. Know your standard hourly rate of pay. If you don't already, divide your weekly salary by the number of hours you work. (weekly salary ÷ hours worked = standard hourly rate)

2. Multiply your standard hourly rate by 1.5 to find the time and a half rate. (standard hourly rate × 1.5 = time and a half-rate).

3. Multiply your time and a half rate by the number of extra hours you worked to find overtime wages due. Don't include any hours that fall below the 40-hour mark. (time and a half rate × overtime hours = overtime wages due)

4. To figure out your total wages due during that pay period, add together your standard wages over a two-week pay period and your overtime wages. (standard wages + overtime wages = total wages)

Fixed Hours Salary Time and a Half Calculation Example

Alexandria is a salaried employee who makes $34,100 per year. Because her salaried pay is under $35,568 annually, she is considered a non-exempt employee by the Fair Labor Standards Act (FLSA). That means she easily qualifies for overtime.

But, how much would she make if she worked 47 hours last week? Let's plug it in:

1. First, we need to know Alexandria's standard hourly rate of pay. Let's start by breaking down her yearly pay into weeks, so we can more easily break it down into months. To find her weekly pay, we need to divide $34,100 by the number of weeks in the year: 52. ($34,100 ÷ 52 = $656 per week)

2. Next, we need to turn that weekly rate into an hourly rate. To do so, we can divide that weekly income by the standard 40 hours per week. ($656 ÷ 40 = $16.40 per hour)

Perfect. Now that we know her hourly rate, we can continue on. Let's calculate her time and a half pay:

3. Multiply Alexandria's standard pay of $16.40 by 1.5 to find the time and a half rate ($16.40 × 1.5 = $24.60)

4. Multiply $24.60 by the seven extra hours worked to find overtime wages due. ($24.60 × 7 = $172.20)

Therefore, Alexandria earned an extra $172.20 through her time and a half pay.

Though, if we want to find out how much Alexandria earned overall that particular week, we need to follow the last step.

5. Add Alexandria's standard weekly wage of $656 and her time and a half wages of $172.20 together. ($656 + $172.20 = $828.2)

As you can see, finding the time and a half wages for a fixed salary isn't too much more complicated.

All Hours Worked Salary Time and a Half Calculation Steps

In the case of an all-hours worked salary, pay will cover all hours worked, no matter how many hours you work. With that in mind, the steps for calculating it are a bit different.

1. To find your total hourly rate, divide the weekly salary by the total number of hours worked. (weekly salary ÷ total hours worked = total hourly rate)

2. Because this rate already accounts for overtime hours, you then multiply the total rate of pay by 0.5 instead of 1.5. (total hourly rate × 0.5 = time and a half-hourly rate)

3. Multiply your total overtime hours by your time and a half-hourly rate. (overtime hours × time and a half-hourly rate = overtime wages)

4. add your overtime and standard wages together to calculate your total wages for the period. (overtime wages + standard wages = total wages)

All Hours Worked Salary Time and a Half Calculation Example

Tom makes $1,250 per week, working 40 hours per week. However, this week he worked 45 hours, meaning there are five hours of overtime pay to account for. To calculate his time and a half-hourly rate, and overtime rate, we can use the following steps:

1. First, we need to divide Tom's weekly salary of $1,250 per week by the 45 hours he worked. ($1,250 ÷ 45 = $27.78)

2. Because this rate already accounts for overtime hours, we can multiply $27.78 by 0.5 instead of 1.5. ($27.78 × 0.5 = $13.89)

3. Multiply the five-overtime hours by $13.89. (5 × $13.89 = $69.45)

4. Add Tom's overtime wages of $69.45 and standard wages of $1,250 together to calculate his total wages for the period. ($69.45 + $1,250 = $1,319.45)

Therefore, Tom's overtime wages under all hours worked salary was $69.45, and his total wages were $1,319.45.

Most Common Time and a Half Policies

To understand the common time and a half policies, it's important to know why companies implement them and when they're required to. The obvious reason is to provide an incentive, so employees are more likely to take unpopular workdays (like holidays) or work more than 40 hours per week.

However, Federal law requires that employees are given 1.5 times their regular pay rate for each hour worked over 40 in a workweek. On top of that, some states require time and a half by law for certain instances.

For example, Massachusetts and Rhode Island are the only two states in the union where private companies are required to offer paid time off or time and a half for national holidays.

The most common holidays that qualify for time and a half include:

• New Year's Day

• Martin Luther King, Jr. Day

• President's Day

• Memorial Day

• Independence Day

• Labor Day

• Columbus Day

• Veterans Day

• Thanksgiving Day

• Christmas Day

Though, it's important to note that even if the FLSA does not require companies to give time and a half for federal holidays or Sundays, many companies still opt to provide it for competitive reasons.

Additionally, there are some common exceptions to overtime. For instance, firefighters, police officers, nurses, and other public servants have unique policies. Unfortunately for these employees, their employers are not mandated to pay overtime for weekend or night work unless their hours surpass the Federal 40 hours per week.

These employees are expected to work weekends, holidays, and nights, so they receive little in the way of incentives.

Of course, the best way to know what your particular company's time and a half policies are is by doing some research. Ask your manager or read the employee handbook if you're not sure.

Exempt vs. Non-Exempt Employees

It's important to know the difference between exempt and non-exempt employees because only non-exempt employees can earn time and a half pay. The FLSA classifies exempt workers as those who meet all three of these criteria:

• Are salaried rather than paid hourly

• Earn at $35,568 or more a year

• Have job duties that are considered exempt (such as executive, administrative, or computer-based duties)

On the other hand, an employee is non-exempt if they:

• Are not salaried and instead are paid hourly

• Earn less than $35,568 a year

• Do not have job duties that are considered exempt (such as executive, administrative, or computer-based duties)

While an employee has to meet all three criteria in order to be exempt, they generally only have to meet one non-exempt criterion to be a part of this group.

There are additional exceptions to these rules, so make sure you do your research and check your state's laws surrounding this issue.

Final Thoughts

While only overtime time and a half are required by the FLSA, many businesses implement time and a half policies for competitive reasons and to provide employee incentives.

When calculating time and a half, it's important to consider whether you're a salaried or hourly employee. But luckily, from there, time and a half isn't super tricky to understand and can be calculated easily using the steps laid out above.

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