Time equals money, but time is also delicate to all workers. There are federal laws regarding overtime pay outlined in the Fair Labor Standards Act (FLSA), but they are fairly limited. Many states in America have additional overtime laws in place. For example, California’s general overtime provisions are very broad and detailed. According to the FLSA, employers must pay time and a half to employees who work more than 40 hours in a single workweek. What are the key differences between Double Time, Overtime, and Time and a Half?
There are no official provisions for Double Time pay in the FLSA, but in certain situations in the California Labor Code, there are several provisions that require Double Time pay. This is a pay rate that is twice the employee’s normal rate of pay. Employees could be eligible for Double Time pay when they work Overtime hours, or holiday pay for employees who work on federal holidays.
Depending on the structure of union contracts, Double Time wages could be included but companies are generally not required to include them. Along with holidays, employees that work any Overtime hours after a certain amount of time, or work irregular or less desirable shifts can receive Double Time pay.
An example of Double Time would be any day before Independence Day, July 4. An employee works 32 hours that workweek, and 8 of those hours fall on the last day before Independence Day. First, you will determine how many hours are subject to Double-Time wages. Secondly, double that employee’s hourly rate. If that employee regularly earns $10 per hour, the Double Time rate would be $20.
The Double Time hours are then multiplied by the Double Time rate. The total pay for the employee on the workday before Independence Day would be $160, $20 times 8 hours. You would then add the Double Time wages to the employee’s regular wages for the pay period. Taxes and other deductions are then withheld as normal.
There are two situations in the California Labor Code where employers will need to pay Double Time wages to employees. The first situation is if an employee works more than 12 hours in a workday, any hours in excess of those 12 hours must be paid double. The other situation is if an employee works 7 consecutive days in a pay period, they must be paid double for any hours worked in excess of 8 hours on the seventh day.
An employer who allows an employee to work Overtime is generally required to pay the employee premium pay for any Overtime work that is done. Employees that are covered by the FLSA must receive Overtime pay for hours worked in excess of 40 workweek hours. Employees are divided into two different groups under the FLSA, which are exempt and nonexempt employees. Exempt employees are salaried and won’t receive any Overtime pay. To become exempt, the job responsibilities of an employee must meet strict standards, including management positions and professional work that has a payment threshold.
It should also be taken into account that employees that are specifically exempted by the provisions of one of the Industrial Welfare Commission Wage Orders regulating wages, hours, and working conditions are also not required to be given Overtime pay.
Nonexempt employees are subject to the FLSA and are eligible for Overtime pay. This payment begins when an employee works more than 40 hours in a workweek, and more than 8 hours in one day in some states like Alaska, California, and Nevada or 12 hours in Colorado. People in manufacturing establishments in Oregon who work over 10 hours a day become eligible.
As an employee, you are not allowed to waive your right to obtain Overtime pay. If you happen to work all day on a spreadsheet and forget to save your work as you progress, and then an accident occurs around 5:30 pm. A power outage causes you to lose all of your work. You are responsible for this mistake and your boss is upset with you for not saving the spreadsheet.
The following morning includes an emergency meeting at 8:00 am, and to finish the document, the employee must stay at least 5 hours late, amounting that employee’s work time to 45 hours for the week. That employee will still get Overtime pay for those 5 hours, even though he or she caused that Overtime to begin with.
Time and a Half
When an employee works Overtime hours, they must be paid at least Time and a Half. This is also known as the Overtime premium. Time and a Half pay is exactly as it sounds, being 50% more than an employee’s regular rate of pay. For every hour of Overtime that is worked, employees must be given their regular rate of pay plus half of that. An employee’s regular rate is simply multiplied by 1.5 in calculations.
One thing that employees will need to keep an eye on regarding Time and a Half pay would be their Net Income. While their general income would be increased by 50%, their take-home pay after deductions won’t be boosted by much. Depending on one’s current tax bracket and the state one lives in, a lot of Overtime pay will be taken off checks before employees receive it.
For example, a worker earns $22 per hour and puts in an extra shift of 8 hours each week for Time and a Half pay. That worker’s Overtime pay will be $33 per hour. This amounts to an extra $264 each week in gross income. However, the tax bracket also increases, so the worker’s deductions will be increased as well. Including state and federal income taxes, along with an increased employee-paid payroll tax, the extra $264 means that the worker’s Net Income for the week will be closer to $168.
Overtime pay policies will vary between companies, but a common rate in this kind of pay is Time and a Half. What does Time and a Half mean to employers? It basically means that although they will be surrendering more to payroll, they are also giving acknowledgment of the value of the time their employees put in. Time and a Half pay is a great way to incentivize hard work.
It is also important to note that employees that work on holidays won’t be regarded as working Overtime hours. This would include bank holidays like Labor Day, Independence Day, Easter, Memorial Day, New Year’s Day, and Christmas. In the case of some companies, bosses will simply provide off days for employees on holidays to establish more functional relationships between staff and to promote a stronger work-life balance for employees.
There are key differences between the payment methods of Double Time, Overtime and Time and a Half. However, there are similarities that tie each method together. Overtime and Time and a Half are basically the same thing in some senses. One key separating detail is the amount of pay employers give employees, especially if the pay isn’t multiplied by 1.5. Double Time is the most accumulative payment method for employees because the incentives are there for them to perform at a high level for their companies. Aside from laws that are in place, employers can decide how much they will pay their employees once they work past regular hours, an amount of pay that all sides can agree to.
Keith Miller has over 25 years experience as a CEO and serial entrepreneur. As an entreprenuer, he has founded several multi-million dollar companies. As a writer, Keith's work has been mentioned in CIO Magazine, Workable, BizTech, and The Charlotte Observer. If you have any questions about the content of this blog post, then please send our content editing team a message here.