How Does Overtime Work With Biweekly Pay?

Understanding how overtime is calculated with biweekly pay can sometimes be confusing. This article will clarify the interaction between overtime regulations and biweekly pay cycles.

Understanding Overtime Fundamentals

Overtime compensation is a federal requirement for eligible employees under the Fair Labor Standards Act (FLSA). This law mandates that non-exempt employees receive additional pay for hours worked beyond a standard threshold. The FLSA defines a standard workweek as 40 hours.

For any hours worked over 40 in a workweek, employees must be paid at a rate of at least one and one-half times their regular rate of pay. This “time and a half” rate is a core component of overtime calculations.

Calculating Overtime with Biweekly Pay

Even when an employee is paid biweekly, overtime is always calculated on a weekly basis. This means the 40-hour threshold for overtime applies to each individual 7-day workweek within the biweekly pay period, not to the entire 80 hours of the two-week period. An employer cannot average hours across the two weeks to avoid paying overtime.

For example, if an employee works 45 hours in the first week and 35 hours in the second week, they have worked a total of 80 hours for the biweekly period. Despite the 80-hour total, five hours of overtime must be paid for the first week. This is because the overtime calculation resets at the end of each defined workweek.

If an employee’s regular rate is $20 per hour, their pay for the first week would include 40 regular hours at $20 and 5 overtime hours at $30 ($20 x 1.5). The second week would be 35 regular hours at $20, with no overtime. This weekly calculation ensures proper compensation for extra hours worked.

Important Considerations for Biweekly Overtime

An employer’s defined “workweek” is a fixed and regularly recurring period of 168 hours. This workweek does not necessarily need to align with a calendar week and can begin on any day and at any hour established by the employer. Once established, this defined workweek remains fixed for overtime calculation purposes.

While federal law sets the baseline, some states may have additional overtime requirements. These state laws might include daily overtime rules or other provisions that exceed federal standards. Employers must adhere to the law that provides the greater benefit to the employee.

Certain non-worked hours, such as paid time off (PTO), holidays, or sick leave, do not count towards the 40 hours when calculating federal overtime. Overtime under the FLSA is based on hours actually worked. Therefore, if an employee takes a paid holiday, those hours are paid but do not contribute to the 40 hours required before overtime becomes applicable.