How-to Guide:
How to Calculate Overtime on a Semi-Monthly Pay Period
Some employers choose to pay their employees twice each month, usually on the 15th and
last day of the month. While this type of pay period can be useful for employees who
know with ease when their next paycheck will arrive, it can be difficult to administer
because each pay period has a different number of days and usually will end in the
middle of a workweek. For HR and payroll administrators who operate on this pay
period, calculating overtime for their hourly (nonexempt) employees can quickly become
confusing. Below are step-by-step instructions on how to calculate overtime on a semimonthly pay period.
Step 1: Establish your pay period
Using your calendar, mark the start and end date of the pay period you are working on.
Step 2: Determine workweeks in the pay period
The Fair Labor Standards Act (FLSA) requires employers to establish a consecutive
seven-day period for their workweek. All employers should have a start and end date
established for each workweek.
Using the same calendar as in step 1, use a different symbol or color to mark the start and
end of each workweek that falls within your pay period. It is likely that a workweek may
start prior to the beginning of your pay period, and a workweek may end after the end of
your pay period. Mark these even though they fall outside of the pay period.
Step 3: Count number of hours for each workweek
For each workweek that falls into the pay period (even if it’s a partial workweek), count
the total number of hours worked for the employee in that week and write the total in the
margin.
Step 4: Decide if overtime is owed
Any employee who has worked more than 40 hours in this seven-day period is owed
“overtime” at a rate of 1.5 times his or her regular rate of pay according to federal law.
For any workweeks that end during the pay period where the employee has worked more
than 40 hours, you must pay overtime when you pay the employee for this pay period.
Step 5: Determine gross pay for employee
Now that you’ve determined whether or not any of the hours worked in this pay period
would be overtime hours, you can establish the number of hours worked at the
employee’s regular rate of pay. That amount plus the amount calculated by multiplying
the overtime hours by 1.5 are the gross wages owed for this pay period.
Example
Scenario: A calendar for ABC Company’s pay period is below. ABC operates a Sunday
through Saturday workweek.
Sun
Thurs
Fri
Sat
6/28/09 6/29/09 6/30/09 7/1/09
7/2/09
7/3/09
7/4/09
8
0
0
32
16
Sat
Total
Hours
for
Week
Total
Hours
in Pay
Period
0
44
44
Sat
Total
Hours
for
Week
Total
Hours
in Pay
Period
42
16
8
Tues
Total
Hours
in Pay
Period
Wed
0
Mon
Total
Hours
For
Week
8
8
Sun
Mon
Tues
Wed
7/5/09
7/6/09
7/8/09
7/9/09
0
10
8
8
Sun
Mon
Tues
Wed
Thurs
Fri
7/10/09 7/11/09 7/12/09
8
Thurs
10
Fri
7/13/09 7/14/09 7/15/09 7/16/09 7/17/09 7/18/09 7/19/09
0
8
8
8
8
10
0
Actions:
1. The pay period of July 1 through July 15 has been highlighted in yellow.
2. The start and end of each workweek that falls into the pay period has been
marked in red.
3. Payroll counts the number of hours in each workweek that cuts into the
pay period. Payroll notices that two of the weeks have overtime that has
occurred.
4. The payroll administrator notices that the week beginning 7/5/09 is a
complete workweek in the pay period and that the employee worked four
hours of overtime that week. The payroll administrator determines that
four hours of overtime is owed for this week.
5. The second week in which overtime occurs (7/13/09) ends after the pay
period has ended. Payroll will pay overtime for this workweek in the next
pay period.
6. Payroll totals the number of hours worked for this pay period and
determines that the employee has worked a total of 76 hours this pay
period; 72 hours will be paid at the employee’s regular rate of pay and the
remaining 4 hours will be paid at the overtime rate of 1.5 times the
employee’s regular rate of pay.
Developed September 2009