Organizational Wellness

Everything You Need to Know About Using Straight-Time Pay

Last Updated Nov 8, 2024

Time to read: 6 minutes

Did you know losing just one hourly worker could cost your company $1,500? And losing a salaried employee could cost twice their annual salary?

That’s why so many organizations are laser-focused on improving retention—and it all starts with compensation. Poor pay is one of the biggest reasons employees leave, so revamping how you compensate your team can be a game-changer. As an HR pro, you’re in the perfect spot to make that impact.

One strategy to explore is straight-time pay, a flexible option for both hourly and salaried employees. Discover what sets it apart and how it can help you boost retention by showing your team how much you value their contributions.

What Is Straight-Time Pay?

Straight-time pay is simply the regular pay employees earn for their standard work hours, typically up to 40 hours a week for non-exempt employees. It doesn’t include overtime, bonuses, or paid time off—it’s just the employee’s base hourly rate times the number of hours worked.

Here’s how it works:

Hourly Employees: They get their hourly wage multiplied by the hours they worked (up to 40 hours).
Salaried Employees: For salaried, non-exempt workers, straight-time pay is essentially what they’d earn for 40 hours, even though they’re on a fixed salary.

Straight-time pay is easy to understand, helping employees know exactly what they’ll earn each week. This kind of clarity fosters trust and keeps things transparent between employers and their teams.

How Is Straight-Time Pay Calculated?

Straight-time pay calculations depend on whether the employee is hourly or salaried, and it’s a breeze once you get the hang of it!

For Hourly Employees:

It’s as simple as multiplying their hourly wage by the number of hours they worked. For example, if an employee earns $20 an hour and worked 38 hours, their straight-time pay is:

$20 (hourly wage) × 38 (hours worked) = $760 for that pay period.

Remember, this formula covers only up to 40 hours a week—anything over that would be overtime.

For Salaried Employees:

For salaried employees, you’ll calculate their pay by dividing their annual salary by 52 weeks to find their weekly earnings. Then, multiply that by the number of weeks in your pay period.

For instance, if someone earns $60,000 annually, their weekly pay is:

$60,000 ÷ 52 = $1,153.85 per week.

If you’re paying them biweekly, just multiply that by two:

$1,153.85 × 2 = $2,307.69 for the two-week pay period.

Easy, right? Straight-time pay helps keep things transparent and clear for everyone, ensuring employees know exactly what to expect each paycheck!

Straight-Time Pay vs. Overtime Pay

Straight-time pay covers the first 40 hours worked in a standard workweek for non-exempt employees, while overtime — often referred to as “time and a half” — applies to any hours worked beyond that threshold.

Overtime is typically reserved for hourly workers, but certain salaried employees, such as those performing physical labor (e.g., in construction), may also qualify. Understanding this distinction is crucial, as straight-time applies up to 40 hours, with overtime kicking in only after surpassing that limit.

For example, if an employee works 45 hours in one week and their hourly wage is $20:

Straight-time pay for 40 hours: $20 x 40 = $800
Overtime pay for 5 hours: $30 x 5 = $150 (where $30 is the overtime rate)

Total earnings for the week: $950.

Unique Exceptions to Straight-Time Pay

While straight-time pay is typically calculated based on the regular hours worked, there are certain situations where this standard calculation doesn't apply. Here are two common exceptions:

Paid Time Off (PTO): When employees take PTO, those hours aren’t factored into straight-time calculations. Instead, straight-time pay only covers the hours worked. For example, if an employee typically works 40 hours a week at $20 per hour, their normal straight-time pay would be $800. If they take 10 hours of PTO in a given week, their straight-time pay for the hours worked would be $600. The PTO is still paid, but it’s separate from the straight-time calculation.
Daily Pay: While most companies use weekly or bi-weekly pay periods, some pay employees daily. In these cases, straight-time pay is calculated by multiplying the hours worked each day by the hourly rate. For example, if an employee earns $20 an hour and works eight hours in a day, their straight-time pay for that day would be $160.

These exceptions keep things flexible while ensuring employees are paid fairly for their time worked!

Laws and Regulations Regarding Straight-Time Pay

The Fair Labor Standards Act (FLSA) helps make sure employees are paid fairly, including rules around straight-time pay. It sets a standard 40-hour workweek, and if anyone works more than that, those extra hours count as overtime. The key thing to remember? You can’t average out hours over multiple weeks to avoid paying overtime—each week stands on its own.

For example, if someone works 50 hours one week and only 30 the next, they’ll get overtime pay for the 10 extra hours in that first week, and then straight-time pay for the 30 hours worked the following week.

Fair pay isn’t just a compliance issue—it’s a big part of keeping employees happy and engaged. When people know they’re being paid fairly, they’re more likely to stick around, and that makes a real difference to retention. Plus, accurate pay records (which are required under the FLSA if you have 15 or more employees) build trust. Using payroll software can make this process easy and transparent for everyone.

At the end of the day, getting compensation right shows your team you value their hard work, which can boost morale and help reduce turnover. A win for everyone!

Wellbeing and Compensation Go Hand-in-Hand

Straight-time pay ensures your employees know exactly what they’re earning for regular work hours. This transparency builds trust, but if you’re looking to increase retention and engagement, compensation clarity is just the start.

Wellbeing programs can take your employee support even further. A holistic wellbeing strategy boosts morale and reduces turnover—98% of HR leaders report that their wellbeing program decreases turnover. And that’s not all: 99% say their wellbeing program increases productivity.

Speak with a Wellhub Wellbeing Specialist today to learn how adding wellbeing initiatives to your compensation and benefits strategy can keep your team happy and motivated!