Straight-Time Pay

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What is “straight-time pay”? 

Straight-time pay refers to the total amount of money that an employee earns in an established standard period which is usually one or two weeks. Straight-time pay is based on an employee’s hourly wage rate. This is the regular wage that an employee is expected to receive for the specific number of hours in each pay period. Remember that when we say straight-time pay, this does not include overtime pay and any paid time off.

The Fair Labor Standards Act (FLSA) regulates straight-time pay. It also set standards for minimum wage, overtime pay, recordkeeping, and youth employment standards. According to the FLSA, employers must pay time-and-a-half (1.5x the employee’s normal hourly wage) for non-exempt employees who worked over 40 hours in a single workweek.

How do you compute an employee’s Straight-Time Pay? 

If you want to find out an employee’s straight-time pay, remember this formula:

Straight-Time Pay = Employee's Hourly Wage Rate × Hours Worked in a given period

Let’s have an example.

Lauren works for 35 hours per workweek. Her hourly rate at her job is $12 per hour. What is Lauren’s straight-time pay? 

$12 × 35 hours = $420

Lauren’s straight-time pay is $420 per week before applicable tax withholdings and deductions. 

What if you want to compute the straight-time pay of a salaried employee? You can calculate it by working backward. Salaried employees are generally given an annual salary. If an employee’s annual salary is $24,960, divide it by 52 which is the number of weeks in a year. 

$24,960 ÷ 52 = $480

In this example, the salaried employee’s straight-time pay is $480 per week. 

When do you use straight-time pay and overtime pay? 

Straight-time pay does not include overtime pay. When an employee works for 40 hours or less in a workweek, straight-time pay is used. On the other hand, if an employee works for more than 40 hours a week, this is when you should use overtime pay. 

Overtime pay, per FLSA standards, is calculated by multiplying an employee’s regular hourly rate by time and a half or 1.5 for every hour worked above 40 hours. 

For example, if an employee’s hourly rate is $12 per hour, they should be paid $18 for every hour worked after 40 hours per week. 

To get an employee’s gross pay or total pay, this is the sum of straight-time pay and overtime pay, if applicable. 

For example, Miguel works at a shoe store. He works for 40 hours a week with an hourly rate of $10. Miguel rendered overtime work of 8 hours for the week. What is his total pay? 

$10 × 40 hours = $400 (straight-time pay)

$10 × 1.5 = $15

$15 × 8 hours = $120 (overtime pay)

$400 + $120 = $520 (total pay)

Straight-time pay applies to all employees. Overtime pay only applies to non-exempt employees because exempt employees are not entitled to overtime pay.

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