What is straight-time pay?

Straight-time pay is the total amount of money an employee earns in any given period, usually a week or two. Typically, straight-time pay does not include overtime pay or  paid holidays  . In other words, straight-time pay is the regular pay an employee receives for working regular hours.

How is straight-time pay calculated?

To calculate straight-time pay, multiply the number of hours the employee typically works by their hourly pay rate. If an employee earns $15 per hour and typically must work 30 hours a week, that employee's straight-time pay for the week is $450 (before taxes and other deductions, of course).

To calculate a salaried employee's straight-time pay, you'll need to work backwards. Salaried employees have their pay fixed for the entire year. If our hourly employee from the previous paragraph was upgraded to a full-time, salaried position, their annual salary would be $31,200. We can easily find their weekly pay by dividing their salary by 52 (the number of weeks in a year), which comes to $600.

What are the laws regulating straight-time pay?

Straight-time pay   is regulated by the Fair Labor Standards Act (FLSA) . Passed in 1938, the FLSA established minimum wages, overtime pay, and general record-keeping requirements, such as time tracking, for private and public companies.

According to the FLSA, all employees must receive a certain regular pay rate. The regular pay rate will help determine how much an employee's overtime pay will be.

The FLSA also sets 40 hours as the standard workweek; if an employee works more than this limit he or she is entitled to overtime compensation, unless he or she is an exempt employee.

When is straight-time pay vs. overtime pay used?

Straight-time pay is used to calculate the pay of an employee who works less than or equal to 40 hours a week. All hours worked over 40 during the week  are subject to overtime pay  laws. Overtime pay is calculated by multiplying the employee's regular pay by 1.5. If an employee earns $15 per hour, he or she would be paid $22.50 ($15 times 1.5) for each hour of overtime. This multiplier is why overtime pay is sometimes referred to as time and a half.

If your employees work hourly, you must use overtime pay to calculate their earnings for each hour they work over 40 hours in a week. Paying employees their straight-time pay for overtime hours is a violation of the FLSA and therefore illegal.

However, if your employee is salaried and exempt from overtime benefits, you can compensate them with straight-time pay even if they work more than 40 hours a week. An employee can only be exempt if they:

• Are paid at least $35,568 a year or $684 a week (based on 2020 rates; you may need to check your current tax year figures)
• Payment is made on a salary basis
•  Perform  exempt job duties , including tasks requiring advanced knowledge

Does straight-time pay apply to all employees?

While overtime pay may not apply to all employees, straight-time pay does. Straight-time pay is the default payment option for employees and mandates the regular pay they receive for their labor.