We realize that healthcare professionals deal with plenty when it comes to employees. One major issue is payroll, and one of the most confusing and time-consuming components of payroll is overtime.
Most healthcare professionals, like yourself, have to pay overtime, according to state and federal laws. Overtime pay typically equals time and a half, which is the hourly wage plus 50 percent more of that wage for every excess hour worked. Unless the healthcare employee is exempt, and some exceptions do occur, this must be calculated.
The importance of how to calculate or when to calculate is sometimes confusing, but we’re here to help. Here the breakdown of daily vs. weekly overtime.
Recommended Reading: The Fundamental Guide to Overtime Rates and Calculations for Healthcare Practices
What is Daily Overtime?
Daily overtime must be paid for those who work over eight hours a day. Certain states and areas require daily overtime, including California, Alaska, Nevada, Puerto Rico and the Virgin Islands.
The rules differ depending on the territory. For example, Alaska has requirements for those that employ over 4 employees, whereas Nevada’s rules depend on how much the employee makes.
It’s common to mistakenly combine weekly overtime with the person’s daily overtime, accidentally paying them twice for the same hours worked.
What is Weekly Overtime?
Weekly overtime is paid when an employee works more than 40 hours a week. The overtime rate is one and a half times their regular rate. If a person works 39 hours, then they aren’t overtime eligible, unless they are in a state or territory that pays daily overtime.
What Counts as Overtime?
Hours worked outside of the 40-hour work week count as overtime hours. Exceptions are made forexempt employees, or in states with daily overtime regulations. In those states, hours worked outside of the eight-hour work day count as overtime hours as well.
What is Pyramiding?
In some cases, employees may work over eight hours a day and over 40 hours a week, often resulting in them being mistakenly paid twice for the same overtime hours.
For example, a person who’s worked five days a week at 10 hours a day for a total of 50 hours should be paid only 10 hours of overtime. They should not be paid for 10 hours of weekly overtime, as well as 10 hours of daily overtime.
There are exceptions to every rule. In California, Alaska and Nevada, employers are required to pay whichever calculation (daily or weekly overtime) is higher.
In addition, the California Overtime Law states that the employee should be paid overtime for the hours in excess of the daily overtime hours or weekly overtime hours, whichever number of hours is greater.
How To Calculate Overtime
Overtime is often described as time and half. Once a regular hourly rate is determined, overtime can be calculated as follows:
Hourly Pay Rate x 1.5 = Overtime hourly rate
Here is an example of pay for an employee, such as your dental assistant, working 45 hours in a workweek at $10 an hour:
- $10 x 1.5 = $15 overtime rate
- $10 x 40 = $400 regular work-week pay
- $15 x 5 = $75 overtime pay
- Weekly total: $475
It's a common misconception that overtime is only required for an 80-hour work week. In fact, only paying overtime for an 80-hour work week instead of a 40-hour work week is illegal. As long as the employee is non-exempt, employers must use the time and a half pay scale for OT that is in excess of 40 hours, never 80 hours.
States With Daily Overtime
Daily overtime is not common, and is only required in Alaska, California, Nevada, Puerto Rico, and the Virgin Islands. These states all have daily overtime laws for working over eight hours in a day:
4+ employees would be eligible for OT.
Daily Overtime = >8 hours
Daily Double Overtime = >12 hours
7th Consecutive Day = 1-8 hours at 1.5x rate, >8 hours at 2.0x rate
Daily Overtime = > 12 hours a day.
An employee is exempt from overtime law if they are earning a guaranteed monthly compensation of $2,000 or more.
Daily Overtime = >8 hours
The daily requirements only apply to employees who earn less than 1.5 times the minimum wage.
The set wage changes if they offer health insurance as well.
Semi-monthly Payroll Overtime
Calculating semi-monthly payroll starts with looking at a seven-day workweek as defined by the law. You have the responsibility to identify your company's work week. These should always be consistent without variation from week-to-week or month-to-month.
With this kind of payroll, there are two paydays each month which will fall on different days of the week. In order to calculate overtime for this type of payroll, look at the work week and not the pay period.
A simple way of doing it according to SHRM is to:
- Determine Workweeks in the pay period
- Count the number of hours for each work week
- Identify if overtime is owed
- Determine the regular rate for each work week in which overtime is owed
- Determine the overtime pay
While some of this may seem confusing, knowing your local laws, federal laws, and having a good plan of action will help and we want to help you as well
If you are a current HR for Health client and have additional questions, please reach out to our team by calling 877-779-4747.
If you are not a current HR for Health client and have additional questions, please schedule an HR consultation with us by booking time here or calling us at 877-779-4747, option 1.
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HR for Health is one of the nation’s leading Human Resources Management Systems (HRMS) used by small to mid-sized practices.
Quick note: This is not to be taken as legal or HR advice. Since employment laws change over time and can vary by location and industry, consult a lawyer or HR expert for specific guidance. Learn about HR for Health's HR services