How To Calculate Time And A Half For Overtime
byFiguring out how to calculate time and a half for overtime can be a hassle. You want to ensure your employees are paid fairly for the extra time they put in, but the added complexity can cause headaches. Our guide will help you keep up with overtime and do right by your employees.
Here are the key things you need to know about how to calculate time and a half for overtime:
- Hourly workers are legally entitled to time and a half pay for overtime
- Not all workers qualify for overtime pay
- Properly calculating overtime can help you manage labor costs better
- Tracking overtime helps identify which workers contribute the most to your labor expenses
- Accurately managing overtime can reduce your business’s liability and improve employee morale
What is time and a half pay?
Importance of calculating employees’ time and a half and overtime
How to calculate time and a half for overtime
Using time clock software to accurately track employee overtime
What is time and a half pay?
Time and a half pay is an increased pay rate for employees who work more than 40 hours in a workweek. The Fair Labor Standards Act (FLSA) mandates that non-exempt employees be paid time and a half for any hours worked over 40 in a workweek. For example, if an employee’s regular hourly rate is $20, their overtime rate would be $30 per hour.
Time and a half pay is used to compensate employees fairly for the extra hours they put in. Industries like retail, hospitality, and healthcare often rely on overtime to accommodate fluctuating workloads and staffing needs.
Who qualifies for time and a half pay?
Not all employees qualify for time and a half pay. Virtually all hourly employees are non-exempt, meaning they can earn overtime pay. Most, but not all, salaried employees are exempt from overtime.
Exempt vs. non-exempt staff
An exempt employee is not entitled to overtime pay. Generally, these individuals are paid a salary. However, not all salary workers are exempt from overtime pay. To be exempt, salaried employees must:
- Be paid a predetermined salary that isn’t reduced due to changes in work quantity or quality
- Make the minimum amount specified by federal labor laws (at least $58,656 in 2025)
- Have job duties that primarily involve administrative, executive, or professional tasks
If a salaried worker does not pass all three tests, they are entitled to overtime.
Importance of calculating employees’ time and a half and overtime
Accurately calculating overtime earnings will help you:
Identify ways to cut your labor costs
The biggest benefit to calculating overtime is that you can better understand your labor costs. For example, suppose that your weekend shift consistently racks up lots of overtime hours, but your weekday team rarely claims overtime. You may need to adjust your schedule to improve staffing on the weekends.
Get insights about which employees contribute the most to overtime
Overtime pay provides workers with a chance to earn extra money. However, working too many hours can also lead to burnout. Tracking time and a half pay can help you understand who works too much and who may want an opportunity to make more money. Use this data to balance out overtime opportunities and prevent overspending on wages.
Reduce liability
Properly managing overtime reduces your company’s liability by ensuring compliance with labor laws. Failure to pay overtime correctly can result in legal issues and fines. Accurate calculations and records help protect your business from these risks.
Improve employee morale, productivity, and more
Everyone wants to be fairly compensated for the work they do. If employees know you will pay them overtime when they’ve earned it, morale and job satisfaction will be higher. Happy employees may be more productive and less likely to leave.
How to calculate time and a half for overtime
Here are a few quick examples of how to calculate time and a half for overtime.
Scenario 1: Calculating overtime for an employee who is paid weekly
Suppose that your employee John gets paid weekly, and his hourly rate is $20. Last week, he worked 50 hours and is owed 10 hours of overtime pay. You need to:
- Determine the hourly rate: $20
- Calculate time and a half: $20 x 1.5 = $30
- Multiply overtime rate by extra hours worked: $30 x 10 = $300
John earned $300 of overtime during the pay period.
Scenario 2: Calculating overtime for an employee who is paid biweekly
In this scenario, you pay your worker, Lisa, biweekly. Her hourly rate is $30. She worked seven extra hours the first week of the pay period and ten extra hours the second week of the pay period. You need to:
- Determine the hourly rate: $30
- Calculate time and a half: $30 x 1.5 = $45
- Combine the overtime hours for each week of the pay period: 7 + 10 = 17
- Multiply the overtime rate by extra hours worked: $45 x 17 = $765
Lisa earned $765 of overtime pay during the biweekly pay period.
Scenario 3: Calculating overtime for a non-exempt salaried employee
Non-exempt salaried employees are entitled to time and a half pay if they work more than 40 hours. However, the calculation requires a few extra steps.
Suppose that Ryan normally works 40 hours per week and is paid a salary of $4,000 every four weeks. Last month, he worked 200 hours, and overtime pay is due. You need to:
- Find the hourly rate: Divide $4,000 by 160 = $25 per hour
- Calculate the overtime rate: $25 x 1.5 = $37.50
- Multiply the overtime rate by the extra hours worked: $37.50 x 40 = $1,500
Ryan earned an extra $1,500 in overtime during the month.
Need help crunching the numbers? Use a simple Excel calculator, or better yet, try time clock software.
Using time clock software to accurately track employee overtime
Employee scheduling and time clock software is the best way to calculate overtime pay. A great app will track employee hours, convert overtime to time and a half, and ensure everyone gets paid fairly. While there are plenty of good time clock tools out there, When I Work stands above the rest.
When I Work is a do-it-all payroll and scheduling solution. It includes everything you need to make your life a lot easier.
The time clock accurately tracks each worker’s hours. The team messaging app makes it easy to communicate with your team and stay in the loop about scheduling needs.
Best of all, When I Work offers full-service payroll software. By keeping your scheduling, time tracking, and payroll data all on one platform, you can run employee payroll with just one click.
When I Work can help you calculate and manage employee overtime
Learning how to calculate time and a half for overtime doesn’t have to be a nightmare. You can consistently pay everyone fairly and accurately with a payroll solution like When I Work.
Ready to take the headache out of calculating overtime? Sign up for a free trial of When I Work and check out a better scheduling, time tracking, and payroll solution.
