How to calculate time and a half pay (and what you should be aware of)

In the US, time and a half is a form of overtime compensation where employees are paid 1.5 times their regular hourly rate for hours worked beyond a standard threshold — usually 40 hours per week.

But there’s more to time and a half than a simple calculation. If you have hourly employees, it’s important to understand the full picture.

In this article, we’ll explore time and a half pay in more detail, including how to calculate it correctly and to ensure that you’re always complying with local, state, and federal laws. So let’s jump straight in.

What is time and a half pay?

As explained, time and a half is an overtime rate for employees who work beyond the standard 40-hour workweek. However, it can also apply to those who work on public holidays and, in some cases, weekends.

Its purpose is to protect workers from being overworked without fair compensation, and to encourage companies to manage staffing efficiently.

The law around time and a half (and overtime in general) varies by country, but in the US not all employees are eligible for overtime (and, therefore, time and a half pay). We will explore this in more detail further on in the article.

How to calculate time and a half

As the name suggests, time and a half is relatively straightforward to calculate. For each hour of overtime, you simply pay the employee their regular hourly rate plus 50% of that rate. The “half” is the overtime premium.

For instance, if an eligible employee earns $20 per hour and they work five hours of overtime in a particular week, they’d earn $30 per hour for those five extra hours.

• Regular rate: $20 per hour

• Overtime rate: $20 x 1.5 (“time and a half”) = $30 per hour

For those five hours of overtime, the employee would earn $150 (5 x $30) in overtime pay.

What if the employee has multiple pay rates?

If someone has two roles (e.g., they operate as a warehouse worker and a delivery driver), you may need to calculate a blended overtime rate. This involves finding the weighted average hourly rate, and applying the 1.5x multiplier to that average.

This can get messy fast, and it’s a good idea to use a payroll platform that automates these calculations.

When — and where — does time and a half apply?

In the US, the Fair Labor Standards Act (FLSA) mandates time and a half after 40 hours of work in a single workweek for most hourly (non-exempt) employees (see next section).

However, some states have their own rules that take precedence. In California, for instance, time and a half applies after eight hours in a day, and employees are entitled to double time if they work more than 12.

To see what the rules are in each state, check out our free US State Explorer tool:

Who is entitled to time and a half?

This is where things can start to get a little tricky. As mentioned, not everyone is eligible for time and a half pay in the US, regardless of how many hours they actually work. This is because federal labor law splits workers into two key categories:

• Non-exempt employees

• Exempt employees

Non-exempt employees

Non-exempt employees are (in most cases) hourly workers, and are typically the main type of employee entitled to time and a half under US law. They often work in roles like customer support, administration, retail, manufacturing, and services.

They are protected by federal and state minimum wage and overtime laws, and must be paid the 1.5x time rate for any hours worked beyond 40 hours.

Exempt employees

Exempt employees — sometimes referred to as “salaried” employees — are not entitled to time and a half. However, exemption is based on very specific legal criteria tied to job duties, salary level, and how they’re paid.

To qualify as exempt under the FLSA, an employee must typically:

• Be paid on a salary basis (i.e., a set amount per year)

• Earn at least $684 per week (although this is higher in some states)

• Perform certain types of work, usually in an executive, administrative, or professional capacity

For instance, employees who manage a team, make independent judgements, or have advanced or licensed knowledge in their field (such as lawyers or engineers) are often deemed to be exempt.

The duties test can help you determine whether an employee should be exempt or not.

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It can be easy to get this wrong, especially in startups or scaling teams where people wear multiple hats. But misclassifying a non-exempt employee as exempt can result in unpaid overtime, back wages, and penalties, so it’s advisable to consult with a legal professional if you’re unsure.

A quick note on global teams

Employee classifications and overtime entitlements vary significantly outside the US. In many countries, overtime rules are stricter, and exemptions are harder to justify. If you have employees in other countries (or plan to), it’s advisable to work with a global payroll partner — like Remote — that has in-house, local expertise in multiple jurisdictions.

Common time and a half mistakes

Calculating time and a half may sound straightforward, but many businesses still make mistakes and expose themselves to potential fines and penalties.

Here are some of the most common pitfalls — and how to avoid them:

Misclassifying employees

As discussed, if you wrongly label someone as exempt, they could be denied overtime pay that they legally earned. This is one of the most common wage violations — and it can get expensive, fast.

You will likely:

• Owe back wages for unpaid overtime.

• Receive fines and penalties from the Department of Labor.

• Be subject to lawsuits or legal complaints from the employee(s) in question, creating legal fees and risking PR damage.

To avoid this, ensure you:

• Don’t just simply classify all salaried employees as exempt, as this isn’t automatically always the case. Conduct the duties test for all roles.

• Use clear checklists to determine classification, consult legal or HR experts, and leverage payroll platforms that automatically flag potential misclassifications — especially as you grow into new states or countries.

Overlooking (or misunderstanding) state-specific rules

Most US businesses follow the federal rule: time and a half after 40 hours in a workweek. But, as mentioned, several states go beyond that, with stricter thresholds or different daily rules. Ignoring these can result in serious wage violations.

Here are the differences you need to be aware of:

This is important to be aware of, as you may be non-compliant in one state even if you’re compliant federally. States may also audit your payroll records independently of the federal government.

You can manage this manually yourself, but it’s much quicker and easier to use payroll software that’s built to apply state-level overtime rules dynamically — and update automatically whenever laws change.

Underpaying or miscalculating overtime rates

Even when your business intends to pay time and a half, it can still potentially mess up the math.

For instance, you might accidentally use the wrong base rate for the wage (i.e., you might exclude non-discretionary bonuses or commissions that must be included), or you might forget to calculate a blended rate for employees with multiple roles or pay rates.

This can be costly because even small errors across weeks or months can lead to thousands in unpaid wages. In addition, you might owe end up owing liquidated damages (double the amount owed) under FLSA rules.

To avoid this, ensure you use a payroll system that:

• Accurately factors in all required compensation types into the regular rate.

• Supports weighted average or blended rate calculations.

• Syncs directly with your time tracking data for automatic, accurate pay runs.

Keeping poor records

You can’t prove compliance if you don’t have the records, such as:

• Records of hours worked

• Documentation of pay rates or job classifications

• Records that show when and how overtime was paid

This is particularly important as, in a dispute or audit, the burden of proof is on you — not the employee. In some cases, a lack of records can even be considered evidence of willful non-compliance.

To avoid this, use a centralized payroll system that stores:

• Time and attendance logs

• Classification history

• Pay breakdowns and overtime details

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How can Remote help?

As you can see, time and a half pay — and overtime in general — is about more than just a few simple calculations. You need to be aware of the rules and regulations in every region where you have employees — and the rules may be different, whether you know it or not.

When you work with a centralized, global payroll provider like Remote, you don’t have to worry about any of that. We take on all the heavy lifting, saving you time, resources, and countless headaches.

Specifically, we:

• Automate location-aware calculations. Whether your employee is in California, Canada, or Croatia, Remote applies the correct overtime rules automatically.

• Ensure built-in compliance. We stay current on FLSA updates, local labor codes, and global pay laws, so you don’t have to.

• Provide a unified dashboard. You can track hours, pay rates, and payroll activity in one place. No more juggling spreadsheets.

• Ensure audit-ready records. We generate automatic documentation of time worked, pay applied, and compliance checkpoints in real-time.

Getting it wrong has real consequences. If you want to build trust, avoid legal trouble, and scale your team globally, you need a payroll solution that handles complexity for you.

To learn more, speak to one of our friendly payroll experts today.

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