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. But, what is double-time pay? Read on for the scoop.
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.
State double-time pay laws
Some states (California and Washington) have state labor laws that require you to pay double-time wages in certain situations.
California requires employers to give employees double their regular pay for any hours worked beyond:
- 12 hours on a workday
- Eight hours on the seventh consecutive day of work in a workweek
Washington law may require double-time pay for “certain public works projects.”
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 states that require double-time pay, you can still create your own double-time pay policy. Remember, you don’t have to do this, but it may be a benefit 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 has been updated from its original publication date of July 18, 2012.This is not intended as legal advice; for more information, please click here.