Workers and non-exempt employees are entitled to double time vs overtime pay when they work more than the standard 40 hours in a week, according to the FLSA. However, which one is which? When will you pay your workers overtime, and when will you pay them double time? Understanding all this is essential to comply with the labor laws and ensure employee satisfaction.
Exempt Vs Non-Exempt Employees
Before getting the hang of double time pay, it is essential to understand the difference between non-exempt and exempt employees. In layman’s terms, employees ineligible for over or double time are exempt. That’s because they are salaried and earn at least around $684 for the week. Also, while many people work 40 or 50 hours per week, employers don’t need to pay any kind of overtime to them under the FLSA. Moreover, non-exempt employees are those who are entitled to any kind of overtime pay:
- Earn at least the federal minimum wage.
- Receive less than around $684 per week.
- They are classified as blue-collar workers, but don’t necessarily include agricultural laborers.
- They are first responders, such as police officers.
For employees who receive tips, such as waiters and waitresses, the federal minimum wage is at least $2.13 per hour. On average, they must make $30 minimum in tips for the month. In case their hourly wage doesn’t meet this minimum, then employers must use a tip credit to calculate overtime. Also, depending on their home state, they may be entitled to double time pay.
| DeskTrack Fact |
| In California, the FLSA has no strict rules for employers to pay over or double time to exempt employees. However, paying double time to exempt workers is more complex, as you have to also account for other things, such as bonuses, employer-paid healthcare insurance, and PTO. |
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What is Double Time Pay?
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Double time, also known as double overtime, is when employees work more than the standard overtime hours. As the name suggests, you must pay your workers twice their normal pay rate for working double time. For instance, if, let’s say, employee Y’s pay rate is $10/hour, then:
- Double Overtime Rate: Base Rate/Hour * 2
- $20/Hour: $10/Hour * 2
- For the whole week, if employee Y completed 5 double time hours, then we will use the formula:
- Double time rate * double time hours = double time pay
- $20/hour * 5 = $100
That’s the basics. However, here are a few other things you need to know about double time vs overtime.
- The FLSA doesn’t cover double overtime. So, unless the payment is being made in California or there is a state union agreement, employers don’t need to pay it.
- Employers make up for unpopular shifts with double overtime pay. For instance, they pay it to employees working on public holidays.
- Salaried employees eligible for double overtime must convert their pay to hourly to apply the same rules.
How to Calculate Double Time in California?
Double time, according to the Californian law, is calculated slightly differently. Throughout the USA, the processing depends on the employer. However, in California, the only US state with actual guidelines for double time vs overtime pay, there is a standard. Here’s how it works.
- You will get double time for working any hour over 12 hours.
- You are entitled to double overtime pay for working 7 consecutive days in the current pay cycle.
- If you work more than 8 hours on the 7th day, you must get double time pay for your extra hours.
What is Double Time & a Half?
If you thought double time was the maximum hourly payment an employee can receive, then you were wrong. There are 3 types of payments for working extra hours, which would be double time, overtime, and double time and a half, with double overtime and a half being the highest amount, which for employee Y is:
- Double Time & a Half Rate: Base Rate/Hour * 2.5
- $25/Hour: $10/Hour * 2.5
- For the whole week, if employee Y completed 5 double time and a half hours, then we will use the formula:.
- Double time and a half rate * double time and a half hours = double time and a half pay
- $25/hour * 5 = $125
This may sound too good to be true. However, there are also some real-world circumstances where this applies. Employees get paid their base rate twice, with half their base rate on top. They get to enjoy this cherry on top when they work on:
- Public holidays
- Overtime
- Under particular clauses outlined in the bond.
What is Overtime?
Overtime is the lowest amount of bonus payment non-exempt employees get for working more than 40 hours a week. Fortunately, unlike double time, the FLSA covers overtime, meaning that if you don’t pay overtime, you are being non-compliant and can be entitled to pay a fine, face a lawsuit, or even hand over the rightfully deserved back pay to the concerned worker. Here are a few more things you need to know.
- No employer can deny overtime in any case. That is, whether it is authorized or unauthorized, non-exempt employees.
- State laws, such as those in California, Alaska, and Nevada, outline the rule that employees must get overtime payment for all hours worked over 8 in a workday.
- The FLSA only covers weekly hours. However, as per the state law, employers may end up with either daily or weekly overtime laws to follow.
Moreover, we will calculate it as follows for Employee Y:
- Overtime Pay Rate: Base Rate * 1.5
- $15/Hour: $10/Hour * 1.5
General Guidelines for Calculating Overtime
First, you need to determine whether you have weekly or daily work hours to account for. Once that’s down, here are the 4 rules of thumb we would generally use.
- Determine the threshold. That is, 8 hours per day or 40 hours per week.
- Add all the work hours accordingly.
- Subtract the threshold from it.
- If the number is more than 0, then you are eligible to pay overtime for that number of hours.
Double Time Vs Overtime
Although both double time, overtime, and double overtime and a half are paid for employees working extra hours, the general difference is in the pay rate you must compensate your employees with. Here’s a refresher for both.
- Double Time: Base Rate * 2
- Overtime: Base Rate * 1.5
What is Time & a Half?
Time and a half is the specific amount a worker will receive for doing an overtime job. In layman’s terms, we can say that the employee is receiving 50% their base pay for every overtime hour. Here are a few more things you need to consider.
- Time-and-a-half pay won’t surely increase your net income if you move into a higher tax bracket. Even the take-home pay will seem the same or momentarily higher.
- Overtime is also known as time and a half sometimes.
How to Calculate Time & a Half?
Here are a few steps to end up with how much you need to pay your employees for overtime.
- Sum up the overtime hours = overtime total
- Multiply your regular pay rate by 1.5 = overtime rate
- Time & a Half: Overtime Total * Overtime Rate
- Suppose employee Y worked a total of 5 overtime hours. In such a case, 5 * $15 = $75
Overtime Vs Time & a Half
Overtime is any hour or hours, your employees work over 40 hours in a week or 8 hours in a day (California). On the other hand, time and a half is the payment they receive for that overtime. For example, employee Y will get $15 for every hour over 40, instead of their regular $10.
What if an Employee Qualifies for Both Double Time & Overtime
If an employee qualifies for both double time and overtime, the double time rate overrules all. However, depending on your organizational policies and the state’s employment laws, this may change. Nonetheless, the general rule of thumb is to never compensate any employee twice. That is, for both overtime and double overtime.
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The Key Differences Between Double Time & Overtime
To further elaborate on the difference between double time and overtime, here’s a table.
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The pay rate for overtime is 1.5 times the base rate of the worker. On the other hand, double time is the base rate paid twice. |
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Employees are paid overtime when they work more than their regular hours. However, when employees exceed overtime hours, they get double time pay. For instance, a worker will receive double time pay for working on Christmas. |
Common Challenges for Calculating Overtime & Double Time
So far, calculating double time and overtime pay has been a smooth sail. However, there will be a few more things you must be careful of:
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Knowing the state laws is the key to correctly paying double time and overtime to employees. For example, in the USA, employees typically get overtime pay for working more than 40 hours in a week according to the FLSA. However, according to the Californian law, overtime applies for every day an employee works over 8 hours. |
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Misclassifying employees can result in no or reduced overtime or double time pay. For example, only non-exempt employees get any overtime pay. |
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Calculating double time and overtime can be a complicated process for your HR professionals. One error and you will end up with under- or overpaying your employees, resulting in higher labor costs and a loss for your business. However, what if you can streamline or even automate this tedious process? DeskTrack’s time tracking software can easily integrate with your payroll processing system, ensuring that the system pulls the exact work hours for error-free calculations. Plus, you just have to configure double and overtime rates just once, then leave everything else to the tool. On top of that, you get an integrated employee monitoring, project management, and productivity monitoring interface to ensure that your employees become deserving of the double time, overtime, and double time and a half payment you are giving them. Try now and realize why it’s the preferred workforce management software in 100+ countries.
Frequently Asked Questions (FAQ)
Q. Are Overtime & Double Time the Same?
Ans. No, overtime is when an employee works over 40 hours in a week. Double Time is when an employee exceeds a certain number of overtime hours. Usually, working on a public holiday, such as Thanksgiving.
Q. How Many Hours of Overtime Before Double Time?
Ans. Double Time happens when employees surpass overtime hours. Anywhere between 10 and 15 hours over 40 hours in a week will qualify for double overtime.
Q. Is It Mandatory to Pay Double Time on Sundays?
Ans. Paying employees extra for working on Sundays or public holidays depends on the employment agreement between the contractor and the laborer. However, the FLSA doesn’t mandate extra pay or double time for employers.
Q. What is an Example of DoubleTime Pay?
Ans. Double Time is paid twice the base rate. For example:
- Double Overtime Rate: Base Rate/Hour * 2
- $20/Hour: $10/Hour * 2
- For the whole week, if employee Y completed 5 double time hours, then we will use the formula:
- Double time rate * double time hours = double time pay
- $20/hour * 5 = $100
Q. What is Double Time & a Half?
Ans. Double time and a half is 2.5 times the regular base pay rate for any employee. For example, if employee Y is earning $10/hour, they will earn $25 for every double time and a half hour.
