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Semimonthly Overtime Question Please

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  • Semimonthly Overtime Question Please

    Can someone clear up a question for me as I can't find info anywhere on the internet. What is the 'correct' way to calculate overtime for an employee paid hourly and on a semimonthly basis in Texas?

    My understanding is if there is 11 days in the pay period beginning on the 1st and ending on the 15th... paychecks issued on the 20th... that if an employee worked a total of 90 hours during those 11 working days then 88 hours would be straight time and the remaining 2 hours would be paid overtime at time and a half. We don't differentiate between 40 hour weeks because semimonthly always spans either 15 or 16 days depending on the month worked. Some pay periods have 10 working days (80 hours), some have 11 (88 hours) and some have 12 days (96 hours). During those periods any hours worked over the 80, 88 or 96 is considered overtime and paid.

    Is this correct?
    Is there documentation explaining this?

  • #2
    Patty is the payroll expert so hopefully she will respond soon but it appears to me that what you are doing is illegal. You must calculate OT based on fixed 7-day increments, regardless of what your pay frequency is. If you have elected to pay semi-monthly rather than weekly or semi-weekly, I expect this is something of a pain to calculate but that's just the way it is.

    I'll let patty provide more detail but you cannot calculate OT based on payroll frequency unless you happen to pay weekly, in which case the law and the payroll period coincide.

    The applicable law is the Fair Labor Standards Act.


    • #3
      Could be a nightmare

      Thank you for your reply.
      What a nightmare to figure out.
      If this is illegal it certainly wasn't by design. I actually get paid this way at my job but I work for a railroad and I suspect we fall under different regulations than those governed by state laws.

      It just seemed like the correct way to do it...

      I'll wait for other replies but if this is in fact the case then it would make sense to change payroll frequency from semimonthly to bi-weekly where a check is issued every 2 weeks based solely on 14 days and not 15 days as semimonthly is.


      • #4
        Yep, if you work for a railroad that could change things considerably. Let's see what Patty has to say. Hopefully she'll be by shortly. Stay tuned.


        • #5

          I wasn't asking for myself.... I understand how the railroad works.
          I was asking for a friend who operates a daycare in Texas.
          She only wants to pay correctly and lawfully so we need a clarification on the correct way to pay overtime...... although there isn't much of it we don't want to do it incorrectly. If what you said earlier then it would make sense to switch payroll frequency from semimonthly to bi-weekly. Much easier to compute and understand overtime caluclation vs. what semi monthly would be if your earlier post is indeed correct. Thanks so much for helping by the way.


          • #6
            My comments definitely apply to a day care provider in Texas. She is far better off fixing this problem now than waiting for an employee to figure out that she's getting ripped-off on overtime pay and filing a complaint with the DOL.


            • #7
              They've got it. Overtime is based on the "work week" which is 168 consecutive hours. The problem with semi-monthly pay is that, except in non-leap year Februarys, one or two work weeks overlap the semi-monthly pay frequency. That's why, as a payroll professional for over 27 years, I recommend against SM pay frequencies for nonexempt employees. There's just too much manual calculation and the employees don't understand. Biweekly would be much, much better and easier for the employees to understand, as long as the end of the second work week corresponds with the end of the biweekly pay period.
              I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


              • #8
                sm pay with overtime calculations

                In regards to the semi monthly pay periods. We are now being calculated Sunday to Saturday for OT. Our pay days are the 15th and 31st accordingly. If the pay day falls during the middle of the week any overtime worked for that week will be paid on the following pay check. Is that o.k?


                • #9
                  Yes it is. Because the overtime cannot be determined until the workweek is completed.
                  I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


                  • #10
                    Perfect thanks for the clear answers and quick responses.