Key Takeaways:
- Definition: Straight-time pay is the employee’s regular hourly wage multiplied by the number of hours worked, excluding any overtime or premium pay. It typically covers hours up to 40 per workweek.
- The Difference: Unlike overtime pay, which is 1.5 times the regular rate (for nonexempt hours over 40), straight-time pay is the base 1x rate. Paying nonexempt employees straight-time for hours beyond 40 is illegal.
- Calculation: To calculate, simply multiply the employee’s defined hourly rate by the total regular hours worked (up to 40).
- Formula: Straight-Time Pay = Hourly Wage × Regular Hours Worked
- Compliance Warning: Common payroll mistakes include using incorrect hourly rates, misclassifying employees (exempt vs. nonexempt), and failing to properly apply overtime for hours exceeding the 40-hour limit.
- Compliance Minimum: The straight-time pay rate must meet the highest applicable minimum wage (federal, state, or local).
Payroll terms can blur together. One important term you may have heard is “straight-time pay.” So what is straight-time pay?
Read on to learn about straight-time pay, how it differs from overtime pay, how to calculate straight-time pay, and more.
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What is straight-time pay?
Straight-time pay is the standard rate an employee earns for each hour worked, typically up to a maximum of 40 hours per workweek. It excludes overtime or premium pay. But, you need to know an employee’s straight-time pay to calculate overtime.
How do you find straight-time pay? It’s simply an employee’s normal hourly wage multiplied by the number of regular hours they work.
Straight-time Pay = Hourly Wage X Regular Hours Worked
Let’s say an employee’s standard hourly rate is $20, and they work 40 hours in a week. Their straight-time pay for that week is $800 ($20/hour × 40 hours).
Straight-time pay must be at least the federal, state, or local minimum wage (whichever is highest). Failing to pay correct straight-time wages can lead to employee disputes and penalties.
Straight-time pay vs. overtime pay
The Fair Labor Standards Act (FLSA) sets overtime rules, which requires employers to pay nonexempt employees time and a half when they work over 40 hours in a week.
Use straight-time pay to find the employee’s overtime wages, but don’t confuse the two terms:
- Straight-time pay: Regular hourly wage for typical working hours.
- Overtime pay: Time and a half pay (1.5 times), which applies when nonexempt employees work beyond 40 hours in a week.
Let’s look at an example. An employee earning $20 per hour who works 45 hours in a week would earn:
- Straight-time pay: $800 ($20 × 40 hours)
- Overtime pay: $150 [($20 x 1.5) x 5 hours]
- Total pay: $950
Know the difference between straight-time pay and overtime to comply with labor law regulations and pay employees correctly.
What is straight overtime?
Another closely related term is straight overtime—but this is different from standard overtime pay.
Straight overtime is when an employee receives their normal hourly rate (1x) for extra hours worked rather than the FLSA-required overtime rate of 1.5x.
Paying nonexempt employees straight-time pay for hours worked beyond 40 in a workweek is illegal.
However, there are some situations where straight overtime pay may apply:
- You want to compensate employees who are exempt from overtime for extra time worked
- A nonexempt employee works fewer than 40 hours in a workweek, but works more than their regular hours (while still working below 40 hours, so these aren’t true “overtime” hours)
| Type of Pay | Rate of Pay | When It Applies |
|---|---|---|
| Straight-Time Pay | Regular hourly rate | Up to 40 regular hours per workweek |
| Straight Overtime Pay | Regular hourly rate | Beyond regular scheduled hours but under 40/week (not true “overtime” hours) |
| Overtime Pay | 1.5x regular rate | Over 40 hours in a workweek (nonexempt employees) |
Straight-time pay FAQs
Straight-time pay is required whenever an employee performs their regular duties within the standard workweek (up to 40 hours). You must pay employees at least the minimum wage for all hours worked.
Generally, salaried employees are paid a fixed weekly salary regardless of how many hours they work, so straight-time pay typically doesn’t apply. However, nonexempt salaried employees are eligible for overtime pay.
Straight-time pay typically applies exclusively to hourly employees and hourly pay rates. Although similar, base pay can also refer to salaried compensation, which isn’t limited to hourly employees.
How to calculate straight-time pay: Step-by-step guide
How to calculate straight-time pay:
- Determine the hourly rate.
Clearly define the employee’s hourly wage.
Example: An employee earns $18/hour - Track regular hours worked.
Record hours worked by each employee, up to the standard 40-hour workweek. Use time and attendance software to streamline the way you track hours.
Example: An employee works 38 hours during a workweek. - Calculate straight-time pay.
Multiply the employee’s hourly rate by hours worked up to 40 hours.
Example: $18/hour X 38 hours worked = $684 - Determine if you need to add overtime.
Check for hours beyond 40 hours to calculate additional overtime for nonexempt employees, if applicable.
Common mistakes to avoid with straight-time pay
Payroll accuracy prevents disputes and legal issues. Avoid these common straight-time pay mistakes:
- Incorrect hourly rates: Always confirm hourly pay rates match employment agreements.
- Employee misclassification: Know the difference between exempt vs. nonexempt employees so you comply with overtime laws.
- Not paying overtime: Regularly review work hours to ensure correct payment for overtime hours worked.
Simplify payroll with Patriot’s payroll software
Manual payroll calculations increase the likelihood of mistakes. Payroll software reduces errors, streamlines the payroll process, and automates recordkeeping.
Patriot’s online payroll and our time and attendance software add-on streamlines:
- Payroll calculations
- Hour tracking
- Regular and overtime wage calculations
