Payroll is a notoriously intricate subject, and is not as simple as cutting someone a check that was calculated at a single rate of pay. As an employer, it is likely that you will encounter the issue of double-time pay.
What is double-time pay?
Double-time pay is a pay rate that is twice the employee’s normal rate of pay. Employees might be eligible for double-time pay when they work overtime hours, or holiday pay for employees working on federal holidays. Union contracts may include double-time wages., but the Fair Labor Standards Act (FLSA) does not require you to pay double-time wages to nonexempt employees.
How does double-time work?
You might give double-time pay to employees for:
- work done on a holiday
- irregular or less desirable shifts
- any overtime hours worked after a certain amount of time
Double-time pay example
Let’s say you decide to pay your employees double-time pay for any hours they work on Black Friday.
Jake works 32 hours that workweek, eight of which fall on Black Friday.
Step 1: Determine how many hours are subject to double-time wages. For Jake, eight hours count toward double-time wages.
Step 2: Double the employee’s regular hourly rate. If Jake normally earns $11 per hour, his double-time rate would be $22 ($11 x 2).
Step 3: Multiply the double-time hours by the double-time rate. Jake’s total pay for Black Friday would be $176 ($22 x 8 hours).
Step 4: You would add the total double-time wages to the employee’s regular wages for the pay period. You would then withhold taxes and other deductions as normal.
California double-time pay laws
If you are an employer in California, state labor laws require you to pay double-time wages to nonexempt employees in two situations:
- One and one-half times the employee’s regular rate of pay after the eighth hour worked through the twelfth hour worked in any workday. Double the employee’s regular rate of pay for all hours worked in excess of 12 hours in a workday.
- On the seventh consecutive day of work in a workweek, one and one-half times the employee’s regular rate of pay for the first eight hours of work. Double the regular rate of pay for all hours worked over eight.
How to set up a double-time policy
You can create a policy to provide double-time compensation to employees. If you do not employ workers in California, you can still create your own double-time pay policy. Remember, you are not required to do this, but it may be a benefit that your employees appreciate. If your employees are part of a union, make sure you understand your double-time obligations.
First, make sure your overtime policy is in compliance with FLSA rules for regular overtime pay. You might also want to consider industry standards for double-time if they exist.
Then, decide which situations you are willing to offer double-time pay to employees. Will your employees earn double-time wages for work done on holidays? What about irregular or undesired shifts? Or, will you create a policy similar to California’s that allows employees to earn double-time wages after a certain number of hours worked in a day?
Once you determine your double-time policy, write it down. A good place to put it is in your employee handbook. Whatever double-time policy you choose, make sure you clearly explain it to employees.
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This article was originally published on 7/18/2012.