Payroll is always a first-line priority for practice owners, especially in the dental field, which can include a relatively large number of employees for even a small practice.
For most of us, one of the most confusing and time-consuming components of payroll is overtime (OT). One of the chief causes of confusion is the difference between daily vs. weekly overtime. In addition, as noted by the Fair Labor Standards Act (FLSA), there are different ways that each of these numbers must be calculated for any nonexempt employee.
How Does Overtime Work?
Dental practice owners have to pay overtime according to state and federal laws. They may still wonder: Just how does overtime work?
Overtime pay typically equals time and a half, the hourly wage plus time and a half percent of that wage for every excess hour worked. Unless the dental employee is exempt, and some exemptions occur based on job duties (usually among salaried employees), this overtime must be paid by law. Nonexempt employees must also be paid minimum wage and will likely be subjected to various other labor laws. As such, it is vital that they understand exactly what’s considered overtime.
How and when to calculate this additional payment is sometimes confusing, but it can’t be overlooked or disregarded. As such, if you are wondering, “How does overtime work?”, we’re here to help. Here’s the breakdown we all must consider in daily vs. weekly overtime.
Recommended Reading: The Fundamental Guide to Overtime Rates and Calculations for Healthcare Practices
Paying Daily Overtime
The answer to “How does overtime work?” gets more complicated in states with daily overtime. Daily overtime must be paid for those who work over eight hours daily. In addition, 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, and you will need to check with a local Department of Labor to see what hours of work in your dental practice count for daily overtime. For example, Alaska has requirements for those who employ over four employees, while 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. Fortunately, overtime rules dictate that you only pay daily OR weekly overtime, not both. When calculating pay at the end of each pay period in your dental practice, you should double-check any automated calculations performed by your system to avoid this duplication. This overtime pay is then added to the weekly salary of an employee. The paystub should note when overtime wages are earned for any hourly employees, thus allowing your employees a transparent understanding of how much pay they have earned.
What Is Weekly Overtime? What Is Time and a Half?
Weekly overtime is paid in accordance with federal overtime laws. It is incurred when an employee works more than 40 hours a week. The overtime rate is one and a half times an employee’s regular rate of pay. For example, 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 the regular hours for the workday count as overtime hours. Employees in these instances must be given overtime compensation.
What Is Pyramiding?
You are pyramiding when calculating and then paying overtime against two different periods (daily and weekly). This can happen by accident, and it is an example of where daily vs. weekly overtime laws can get confusing.
In some cases, your dental 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 hygienist who’s worked five days a week at 10 hours a day for 50 hours should be paid only 10 hours for their overtime work. They should not be paid for 10 hours of weekly overtime and 10 hours of daily overtime.
There are some exceptions. Employers must pay whichever calculation (daily or weekly overtime) is higher in California, Alaska, and Nevada. 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.
Recommended Resource: 5 Steps to Creating an Alternate Work Schedule
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Recommended Resource: 5 Steps to Creating an Alternate Work Schedule
How to Calculate Overtime at Time and a Half
If you’re wondering, “What is time and a half?” — don’t worry; it’s just another way of referring to overtime or double time. Once a regular hourly rate is determined, overtime can be calculated as follows:
Hourly Regular Wages 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 premium 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 nonexempt, 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.
Semi-Monthly Payroll Overtime
When wondering “How does overtime work?” and “What is time and a half?”, it is important to keep in mind that other complications — like semi-monthly payroll — can complicate what’s considered overtime.
To calculate semi-monthly payroll, look at the seven-day workweek defined by law. You have the responsibility to identify your dental practice’s workweek. These should always be consistent, without variation from week to week or month to month.
With this kind of payroll, two paydays each month will fall on different days of the week. To calculate overtime for this type of payroll, look at the workweek, 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 daily vs. weekly overtime may seem confusing, knowing local, state, and federal laws can help ensure you are adhering to overtime provisions and giving your employees the total pay they have earned. We want to help you ensure that none of your employees incur unpaid overtime, and we understand how to help you reduce extra hours worked and keep your expenses low. Don’t sweat about how overtime does work — get the help you need.
About HR for Health
HR for Health is an all-in-one HR software solution dedicated to helping dentists and dental practice owners.. 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 set up a no-obligation, 15-minute call.
