What Is Time in Half Pay and How Does It Work?

Overtime pay in the United States provides additional earnings for employees working beyond standard hours. Understanding how this compensation works, particularly “time in half pay,” is important for both employees and employers. This article clarifies the specifics of overtime, its calculation, and who is eligible to receive it.

Understanding Standard Overtime Compensation

The Fair Labor Standards Act (FLSA) sets the federal standard for overtime pay, requiring most employers to pay non-exempt employees an increased rate for hours worked over 40 in a workweek. This standard overtime rate, known as “time and a half,” means an employee receives 1.5 times their regular rate of pay for each overtime hour. The “regular rate of pay” includes all forms of compensation paid to an employee for their employment, such as hourly wages and non-discretionary bonuses.

The FLSA mandates a workweek is a fixed, regularly recurring period of 168 hours. This workweek does not have to align with the calendar week and can begin on any day and at any hour. Averaging hours over multiple workweeks is not permitted for overtime calculation. For instance, if an employee works 60 hours one week and 20 hours the next, the employer still owes overtime for the 20 hours exceeding 40 in the first week.

The Specific Meaning of “Time in Half”

The term “time in half pay” refers to the additional half of an employee’s regular rate paid for overtime hours. It is not a separate, standalone pay rate. When an employee works overtime, they receive their regular hourly rate for those hours, plus an “in half” component, which is an extra 0.5 times their regular hourly rate.

This additional half component completes the “time and a half” overtime rate. For example, if an employee’s regular rate is $20 per hour, the “time” portion for an overtime hour is $20, and the “in half” portion is $10 (0.5 times $20). Combined, this results in a total overtime rate of $30 per hour, which is 1.5 times the regular rate.

Calculating Overtime Hours and Pay

Calculating overtime pay involves a few steps. First, determine the employee’s “regular rate of pay,” which includes their hourly wage plus other compensation like non-discretionary bonuses and commissions, divided by the total hours worked in that week. This regular rate cannot be less than the federal minimum wage.

Second, identify the number of overtime hours worked, which are any hours exceeding 40 in a single workweek. Third, calculate the “half” portion of the overtime premium by multiplying the regular rate by 0.5. For example, if the regular rate is $20, the “half” portion is $10. This $10 is the additional amount paid for each overtime hour.

Finally, calculate the total overtime pay. A common method is to multiply the overtime hours by 1.5 times the regular rate of pay. For instance, if an employee works 5 overtime hours at a $20 regular rate, their overtime pay would be 5 hours multiplied by ($20 x 1.5), totaling $150.

Eligibility for Overtime Pay

Eligibility for overtime pay under the FLSA distinguishes between non-exempt and exempt employees. Non-exempt employees are covered by the FLSA’s minimum wage and overtime provisions, requiring overtime pay for hours worked over 40 in a workweek. Most hourly employees fall into this non-exempt category.

Exempt employees are excluded from FLSA overtime requirements due to their job duties, salary level, and how they are paid. Common categories for exemption include executive, administrative, professional, and outside sales employees, provided they meet specific “duties tests” and earn a salary above a certain threshold ($684 per week or $35,568 annually as of November 2024). Even if an employee is salaried, they may still be non-exempt if they do not meet both the salary and duties criteria.

For overtime calculation, “hours worked” includes all time an employee is on duty, on the employer’s premises, or at any other prescribed place of work. This includes time spent performing job duties, attending required meetings or training, and certain waiting or on-call time where personal activities are restricted. Time not worked, such as vacation or holiday pay, is excluded from the total hours when calculating overtime.