- 27 Feb 2023Zenefits Review
In simple terms, straight-time pay is the total amount of salary a worker receives within a certain period of time. These types of pay are usually given for a standard one or two weeks of work and don’t contain paid time off or overtime. In most cases, this type of payment means the usual salary an employee gets for working regular hours of work.
To measure straight-time pay accurately, you have to multiply an employee’s total number of regular working hours by the hourly salary rate. For instance, a worker works 40 hours in one week with an hourly rate of $20. In that case, the straight-time pay of that employee will be $40 x $20, or $800 a week, which doesn’t include any taxes or deductions.
For a full-time employee, the salary remains fixed for the whole year instead of an hourly wage rate. In these scenarios, you can compute this payment by dividing the yearly salary by the total number of weeks in a year. For example, if the yearly salary of a full-time employee is $52,000, then their straight-time pay will be $52,000/52, or $1000 a week.
The Fair Labor Standards Act (FLSA) established some essential regulations regarding employee compensation, like straight-time pay, overtime pay, minimum wage, etc. According to this 1938 act, every employee must have a specific rate of salary. An employee’s overtime will be calculated based on their regular hourly wage rate. The FLSA also standardized a 40-hour workweek, and if any workers perform their jobs more than 40 hours a week, they will be eligible for overtime pay.
Usually, when an employee works about 40 hours or less in a week, they will be compensated with straight-time pay. These types of salaries don’t have any tax deductions or bonuses.
On the other hand, if a worker exceeds the 40-hour workweek threshold, they will be eligible for overtime pay. The FLSA states that employees should get 1.5 times their hourly salary rate for every hour of work as overtime pay. For example, if someone with a $20 hourly wage rate works more than 40 hours a week, they will receive $30 ($20 x 1.5) for every extra hour.
Unlike overtime pay, straight-time pay can be applied to all types of employees. In fact, the government has authorized this method of payment to be a mandatory option for providing salaries to employees. When hiring workers, the recruiter should be clear about the amount of straight-time pay the employee should obtain for their labor.
In the modern era of remote and hybrid jobs, it's extremely important to make an accurate estimation of straight-time pay. The right amount of payment can significantly reduce employee turnover rate and decrease burnout among the employees. Besides, without a correct measurement of straight-time pay, companies can get into complex legal issues and face severe penalties.
The answer is no. Hourly pay and straight-time pay can’t be similar as they signify different aspects of the salary. Hourly pay is the certain amount of money a worker gets for working one hour. On the other hand, straight-time pay is the total wage an employee receives for working for a specific period.
Another major difference is that straight-time pay doesn’t include any overtime pay or bonuses, whereas hourly pay often adds overtime. So straight-time pay usually remains fixed for most employees, but hourly pay can fluctuate depending on the situation.
Although the concept of straight-time pay is simple, it can have a significant role in designing an employee's wage structure. These types of payments can increase employee job satisfaction and reduce legal issues regarding worker compensation. That's why HR management should understand and implement the idea of straight-time pay in all parts of an organization.