Payroll is always a first-line priority for medical practice owners - especially in the dental field, which can include a fairly large number of employees for even a small practice between office, hygienist, and dental professionals. For most of us, one of the most confusing and time-consuming components of payroll is overtime.
Want help navigating overtime pay? Schedule an HR consultation with us by booking time here or calling us at 877-779-4747, option 1.
Most professionals in the healthcare space, including dental practice owners, 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 of that wage for every excess hour worked. Unless the dental employee is exempt, and some exceptions occur, this overtime must be paid by law.
How and when to calculate this additional payment is sometimes confusing, but it can’t be overlooked or disregarded. We’re here to help. Here’s the breakdown we all have to consider in daily vs. weekly overtime.
Paying Daily Overtime
Daily overtime must be paid for those who work over eight hours each day. Certain states and areas require daily overtime, including California, Colorado, 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 four employees, whereas Nevada’s laws 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. When you’re calculating pay at the end of each pay period, double-check any automated calculations performed by your system to avoid this duplication.
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, they aren’t overtime-eligible unless they are in a state or territory that pays daily overtime and the employee works beyond the daily overtime threshold.
What Counts as Overtime?
Hours worked beyond a 40-hour workweek count as overtime hours. Exceptions are made for exempt employees or in states with daily overtime regulations. In those states, hours worked outside of the established overtime threshold for the workday count as overtime hours.
What is Pyramiding?
You are pyramiding when you calculate and then pay overtime against two different periods (daily and weekly). This can happen by accident.
In some cases, employees may work over eight hours a day and over 40 hours a week, often resulting in a mistaken payment that pays them twice for the same overtime hours.
For example, a person who’s worked five days a week at 10 hours a day for 50 hours should be paid only 10 hours of overtime. They should not be paid for 10 hours of weekly overtime and 10 hours of daily overtime.
There are exceptions to every rule. In California, Alaska, and Nevada, employers must pay whichever calculation (daily or weekly overtime) is higher.
In addition, the California Overtime Law states that the employee should be paid overtime for hours above the daily 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 based on a threshold of 80-hours, which is generally the number of total hours worked in a pay period (bi-weekly payroll). As long as the employee is non-exempt, employers must use the time and a half pay scale for OT that is more than 40 hours worked in the established workweek, never 80 hours.
States With Daily Overtime
Daily overtime is not shared and is only required in Alaska, California, Nevada, Puerto Rico, and the Virgin Islands. These states all have customary overtime laws for working over an established number of hours in a day:
Semi-monthly Payroll Overtime
To calculate semi-monthly payroll, first look at the seven-day workweek defined by law. You have the responsibility to identify your company’s workweek. 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. To calculate overtime for this type of payroll, look at the workweek and not the pay period.
A simple way of doing it according to SHRM is to:
- Determine the workweeks in the pay period
- Count the number of hours for each workweek
- Identify if overtime is owed
- Determine the regular rate for each workweek in which overtime is owed
- Determine the overtime pay
Overtime Doesn’t Have to be Hard
While some of this may seem confusing, knowing your local laws, federal laws and having a good plan of action will help. 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.
About HR for Health
HR for Health is an all-in-one HR software solution dedicated to helping the dental, optometry, and veterinary industries. Our human resources platform features all the tools practice owners need to manage overtime, payroll, timekeeping, 401(k), and more with total integration and ease.
Whether you’re looking for HR support for a small business or an extensive group dental practice, HR for Health has the solution to fit your practice and budget. Reach out to an HR for Health account representative to learn more today.