Business Tips

double time pay

Double Time Pay and Overtime Labor Laws

As an employer, you should be sure of what rules apply to you concerning double time before considering how to address it in your pay policy. Many a labor lawsuit concerns failure to pay overtime, and the same applies to double-time. Therefore, you should convey rules and policies clearly to your team, and be certain you can track their hours accurately and pay in accordance with federal and state law.

What Is Double-Time Pay

While there is a federal definition for overtime with additional overtime rules in certain states, the government has no federal rule for double time or double-time pay. California does have a double-time pay law, though. In addition, many employers in states without double-time laws choose to observe rules for double time within their organization to compensate workers for their willingness to put in long hours or to fill undesirable shifts.

Difference Between Overtime and Double-Time

Overtime pay as established in the Fair Labor Standards Act (FLSA) is one-and-one-half times an hourly employee’s regular wage rate for hours worked over 40 hours in a consecutive seven-day workweek. Double-time pay is when an employee receives twice their regular compensation for hours that fit a specific definition, whether established by the employer or the state.

California Double-Time Rules

The state of California is currently the only state that has established double-time requirements among its labor laws.

How California Defines Overtime

In the California Labor Code, a regular workday is an eight-hour day. When a California employee works more than eight hours on a given shift and/or over 40 hours in a given workweek, they must be paid overtime pay of 1.5 times their regular compensation for all time exceeding eight hours in one day and/or 40 hours during the workweek.

The California Labor Code also establishes that if an employee works on seven consecutive days in the workweek, they must receive overtime pay for the first eight hours of their seventh shift.

How California Defines Double Time

When an employee works more than 12 hours in one shift, the time beyond the initial 12 hours is considered double time. Hence, any time beyond the 12 hours must be paid at twice the regular pay rate, i.e. double-time pay.

Additionally, when a California employee works on seven consecutive days in a workweek—regardless of the total number of hours worked—they must be paid double time for any hours worked beyond eight hours on the seventh day.

How to Calculate Double Time Pay in California

Overtime and double time may seem like simple calculations, but the hours in overtime can seem to overlap with those in double time—and an employee should never be paid twice for the same hour.

So while California employees may receive daily overtime for hours worked beyond eight, this time must be subtracted from your calculations when determining any weekly overtime owed. Therefore, employers, HR admins and payroll clerks have to be careful about calculating overtime and double time in California.

Let’s say an employee works a 13-hour shift. Calculate all hours worked over a 12-hour shift to determine what must be paid double time. In this case, that’s one hour of double time. Then you calculate all hours worked beyond an eight-hour shift but under a 12-hour shift to determine what must be paid an overtime rate of 1.5 the regular wage rate. In this case, that’s four hours of regular overtime.

Here is a formula for calculating California Overtime and Double-time pay for a single shift:

  1. Total single-shift hours less than or equal to 12 hours(minus) 8 = Time paid at overtime rate
  1. Total single-shift hours more than 12 hours(minus) 12 = Time paid at double-time rate

You’ll need this separate formula for calculating California Overtime and Double-time pay for a 7-day period:

  1. Total hours over 40 worked in a workweek (excluding any time worked in excess of 8 hours on the 7th consecutive day of work) – 40 = Time paid at the overtime rate
  1. All hours up to 8 hours worked on the 7th day of the workweek = Time paid at the overtime rate
  1. Total hours over 8 worked on the 7th consecutive day of work – 8 = Time paid at the double-time rate

Again, there are times when both daily and weekly overtime will apply. So how do you balance overtime and double-time in that case? That’s where it gets a little bit complicated.

“Pyramiding” of Overtime and Double-time hours is not permitted by California law. In other words, daily overtime, weekly overtime and double-time cannot be calculated twice based on the same hour. However, an employer must pay either weekly or daily overtime for the week’s hours that qualify, whichever number is greater.

For example, a worker puts in two 13-hour shifts during the week and no more. They will not earn weekly overtime as their total hours is just 26. However, they are entitled to 8 hours’ overtime pay for the 4 hours of daily overtime past 8 hours on each of those days, plus 2 hours’ double-time pay for the one hour exceeding 12 hours on each of those days.

Conversely, if a worker completes a total of 45 hours in a given week but none of his or her shifts is longer than 8 hours, they are still owed 3 hours of weekly overtime pay.

California Double Time Pay Examples

When calculating double-time and overtime pay rates over a day or week, it’s easiest to work backwards from double-time to daily overtime, to weekly overtime, and then to regular time.

EXAMPLE 1

An employee whose regular pay rate is $15/hour works 5 days in a week. On the first four days, they work 5-hour shifts. On the 5th and final day, they work 14 hours. As the employee has worked just 34 hours over the week, federal weekly overtime will not apply. However, California’s daily overtime and double-time requirements will apply.

First, let’s look at the outlier, which is the fifth day:

14 hours – 12 hours = 2 double-time hours

12 hours – 8 hours = 4 overtime hours

Now, we take the total hours worked and subtract the overtime and double-time hours, so that the employee isn’t paid twice for any hours. This will leave us with hours for which the employee is owed their regular pay rate.

20 hours (first four days) + 14 (last day) – 2 double-time hours + 4 overtime hours = 28 hours 

Hence, the worker’s weekly pay will be:

(28 hours) X $15/hour) = $420 + (2 hours X $15/hour X 2) = $60 + (4 hours X $15/hour X 1.5) = $90 = $570

EXAMPLE 2

For the second example, we’ll involve daily and weekly overtime as well as double-time, in order to show you how to keep it all separate. An employee whose pay rate is $15/hour works 7 shifts in a week. For the first 5 days, they work 9 hours per day. On the 6th day, they work 14 hours, and on the 7th day, they work 10 hours.

Again, let’s look at daily double-time first. That will be the 6th and 7th shifts worked. And remember that on the 7th shift, double time applies to all time worked over 8 hours.

On the 7th shift, the employee worked:

10 hours – 8 hours = 2 double-time hours

First 8 hours = 8 overtime hours

On the 6th shift, the employee worked:

14 hours – 12 hours = 2 double-time hours

12 hours – 8 hours = 4 overtime hours

As for remaining daily overtime, on the first 5 shifts, the employee worked:

(9 hours – 8 hours = 1 overtime hour) X 5 = 5 daily overtime hours

Now, for total hours worked over the week, the employee worked:

(5 X 9) + 14 + 10 = 69 total hours

We already know the employee is being paid double-time for some hours on the 6th and 7th days, and daily overtime for some hours throughout the week.

Again, daily and weekly overtime cannot be calculated based on the same overtime hours. Hence, we need to look at the total hours worked and subtract the hours already being classified as double-time and daily overtime hours:

69 hours – (4 double-time hours + 17 daily overtime hours) = 48 hours

48 hours – 40 regular hours = 8 weekly overtime hours

The employee is still owed for those 8 weekly overtime hours that were left after the daily overtime hours were subtracted. Hence, the employee’s weekly pay will be:

(40 regular hours X $15/hour) + (4 double-time hours X $15/hour X 2) + (25 overtime hours) X $15/hour X 1.5) = $1282.50

How to Set Up a Compliant Double-Time Pay Policy

California employers have no choice but to pay double time according to the rules established in the California Labor Code. Alaska, California, Nevada, Puerto Rico and the Virgin Islands all have unique daily overtime laws. Other states and U.S. territories default to the federal weekly overtime law, and again, California is the only state with double-time provisions.

Even if you aren’t required to pay double time, you may choose to do so as incentive for hours worked over a certain number, for hours after a number of consecutive shifts, or for holidays.

Whether you are in California or not, one of the first things you need to do to lay the foundation for consistency and compliance in your overtime and/or double-time pay is to establish a standardized workday and workweek. This means choosing a time of day when your workday starts (typically 12:01 am), and selecting the days of your workweek (often Monday through Sunday, although it doesn’t have to be).

The main point is to pick something and stick to it, unless there are extenuating circumstances. Otherwise, it may look as though you are tampering with the workday and workweek to try to reduce overtime and double-time owed, for which you can be cited and fined.

Once you have established your workday and workweek, if you are outside of one of the states mentioned, you may decide to establish a company double-time policy. For example, per company policy, weekly hours over 55 will be double-time hours and will be paid twice the worker’s regular rate. The key is to set your policy and remain consistent, or you could face legal action for breach of contract or wage and hour violations.

Who Is Exempt from Overtime?

There are certain classifications of employees who are exempt from federal and California overtime laws. Executive, administrative or professional workers who earn salaries are often exempt from overtime laws, as well as workers who earn commissions.

Amount earned is another criteria for determining who must receive overtime pay. The “final rule” that set the FLSA’s new overtime pay thresholds took effect in January 2020 and states that anyone who earns less than $35,568 per year or $684 per week is non-exempt and therefore eligible for overtime pay (this includes double-time).

Because exemptions can be different on a state and federal level, it’s important to research and ensure you follow regulations.

Stay Consistent and Compliant

When it comes to paying overtime and double-time, there is a golden rule of sorts: Stay consistent and compliant.

The federal overtime rules apply to all employers with non-exempt employees, but you must be certain you’re aware of any state overtime rules in addition. If you aren’t required to pay it, you must decide when you will provide double-time pay. Finally, you as the employer are responsible for calculating overtime correctly. You are also responsible for ensuring all non-exempt employees are treated equally in receiving the overtime and double-time pay you owe them. Otherwise, as stated before, you could be found in violation of the FLSA and fined.

ExakTime’s digital time tracking system helps you track hours accurately, set up rules, and keep overtime and double-time hours siloed within your system so that you are automatically calculating them according to regulations every time.

Contact us to learn how you can “set and forget” overtime and double-time rules using ExakTime, and let go of wage and hour compliance worries for good.