How do you calculate overtime pay in Hawaii?

Accurately calculating overtime pay is essential for employers and employees to ensure fair compensation and comply with labor laws. In Hawaii, overtime regulations are governed by state-specific laws and the Fair Labor Standards Act (FLSA).

This article provides a comprehensive guide on calculating overtime pay in Hawaii. It covers various scenarios and offers practical examples to help readers understand these calculations clearly and effectively.

Which Overtime Laws Apply in Hawaii?

In Hawaii, state regulations work alongside the federal Fair Labor Standards Act (FLSA) guidelines to manage overtime rules. Generally, employees who are not exempt under overtime laws are entitled to overtime compensation in Hawaii.

How Much is Overtime Pay in Hawaii?

Generally, employers in Hawaii must pay at a rate of ‘time and a half’. This means employees earn 1.5 times their regular rate for each hour worked over 40 in a workweek. 

Regular pay rates include hourly wages and other forms of compensation like commissions, bonuses, and incentive pay.

Similarly, overtime after eight hours a day and all hours on Saturdays, Sundays, and state holidays is required for certain cases such as state or county public construction projects governed by Chapter 104, HRS, Wages and Hours of Employees on Public Works Law.

Who is Eligible for Overtime Pay in Hawaii?

Most employees in Hawaii are eligible for overtime pay if they work over 40 hours a week.

However, for state or county public works construction projects, workers must receive overtime pay after working more than 8 hours a day and for all hours worked on Saturdays, Sundays, and state holidays.

How do you Calculate Overtime for Hourly Employees in Hawaii?

Hourly employees are paid for each hour they work. For calculating overtime pay for hourly employees in Hawaii:

• Determine the regular rate of pay: The employee’s fixed hourly rate is their regular rate. For example, if a Hawaii employee earns $14 per hour, that’s their regular rate of pay.
• Calculate the overtime rate: Multiply the regular rate of pay by 1.5 times to get the overtime rate. The employee’s overtime rate would be $21 ($14 x 1.5).
• Identify overtime hours: Overtime pay applies when an employee works over 40 hours in a single workweek. If the employee worked 43 hours in a week, the overtime hours are three (43 – 40).
• Calculate overtime pay: Multiply the overtime hours by the overtime rate. From the example, the overtime pay would be $63 (3 hours x $21).

How do you Calculate Overtime for Salaried Employees in Hawaii?

Salaried employees receive a fixed amount of pay each pay period, regardless of the number of hours worked. Their salary is usually calculated annually and divided into regular pay periods (weekly, biweekly, or monthly).

The method of finding a regular rate depends on the salary payment frequency as highlighted below:

• Determine the regular rate of pay:
  • Weekly salary: Divide the weekly salary by 40.
  • Biweekly salary: Divide the biweekly salary by 2, then divide by 40.
  • Semi-monthly salary: Multiply the semi-monthly salary by 24 (for 24 pay periods per year), divide by 52, then divide by 40.
  • Monthly salary: Multiply the monthly salary by 12 (for 12 months per year), divide by 52, then divide by 40.

• Calculate the overtime rate: Multiply the regular rate by 1.5. If the regular rate is $14, the overtime rate would be $21 ($14 x 1.5).
• Identify the overtime hours: All hours worked beyond 40 in a workweek are counted as overtime. If the employee worked 42 hours, the overtime hours would be two (42 – 40).
• Calculate the overtime pay: Multiply the overtime rate by the overtime hours. If an employee’s overtime rate is $21 and worked two additional hours, the overtime pay would be $42 ($21 x 2).

How do you Calculate Overtime for Salaried Employees with Additional Wages in Hawaii?

The regular rate is calculated differently if the employee receives a salary and other types of earnings (such as commissions, bonuses, or piecework pay).

Salary + Benefits >= 50% of Total Earnings:

If the salary and the reasonable cost of board, lodging, or other facilities equal or exceed 50% of the employee’s total earnings, the regular rate is calculated using the same method as salaried employees without additional wages.

• Determine the regular rate of pay (Regular Rate = Total Earnings ÷ 40):
  • Weekly salary: Divide the weekly salary and benefits by 40.
  • Biweekly salary: Divide the biweekly salary and benefits by 2, then divide by 40.
  • Semi-monthly salary: Multiply the semi-monthly salary and benefits by 24 (for 24 pay periods per year), divide by 52, then divide by 40.
  • Monthly salary: Multiply the monthly salary and benefits by 12 (for 12 months per year), divide by 52, then divide by 40.

• Calculate the overtime rate: Multiply the regular rate by 1.5. If the regular rate is $16, the overtime rate would be $24 ($16 x 1.5).
• Identify the overtime hours: All hours worked beyond 40 in a workweek are counted as overtime. If the employee worked 43 hours, the overtime hours would be three (43 – 40).
• Calculate the overtime pay: Multiply the overtime rate by the overtime hours. If an employee’s overtime rate is $24 and worked two additional hours, the overtime pay would be $72 ($24 x 3).

Salary + Benefits < 50% of Total Earnings:

If the salary and reasonable cost of benefits are less than 50% of the total earnings, the total earnings are divided by the actual hours worked during the workweek (instead of 40 hours). The employee must still receive overtime at 1.5 times the regular rate for hours worked over 40 in a workweek.

• Determine the regular rate of pay (Regular Rate = Total Earnings ÷ Actual Hours Worked): 
  • Weekly salary: Divide the weekly salary and benefits by actual hours worked.
  • Biweekly salary: Divide the biweekly salary and benefits by 2, then divide by actual hours worked.
  • Semi-monthly salary: Multiply the semi-monthly salary and benefits by 24 (for 24 pay periods per year), divide by 52, and then divide by actual hours worked.
  • Monthly salary: Multiply the monthly salary and benefits by 12 (for 12 months per year), divide by 52, then divide by actual hours worked.

• Calculate the overtime rate: Multiply the regular rate by 1.5. If the regular rate is $16, the overtime rate would be $24 ($16 x 1.5).
• Identify the overtime hours: All hours worked beyond 40 in a workweek are counted as overtime. If the employee worked 43 hours, the overtime hours would be three (43 – 40).
• Calculate the overtime pay: Multiply the overtime rate by the overtime hours. If an employee’s overtime rate is $24 and worked two additional hours, the overtime pay would be $72 ($24 x 3).

Overtime for Complex Pay Structures in Hawaii

How do you Calculate Overtime Pay for Tipped Employees in Hawaii?

Tipped employees receive a portion of their compensation through tips. 

Section 387-2 of Hawaii Revised Statutes (HRS) provides that an employer may pay tipped employees less than the applicable minimum wage if the tipped employee customarily and regularly receives more than $20 a month in tips and the combined amount of pay and tips is more than the applicable minimum wage.

Employers can reduce employees’ wages by up to $1.25 per hour they earn in tips, a practice known as “Tip Credit.”

After the employer uses the tip credit, the total earnings from the employer and tips must exceed the minimum wage by at least $7.00.

Here’s how to calculate overtime pay for tipped employees in Hawaii:

• Determine the cash wage paid to the employee: Applicable minimum wage of $ 14.00 per hour.
• Determine whether tip credit can be used: Let us say an employee receives more than $20 per month in tips. Therefore this employee is a tipped employee and tip credit can be used.
• Determine the regular pay rate: If a tipped employee receives $8.00 per hour in tips, add these tips to cash wage ($8.00 + $14.00 = $22.00). The maximum allowed tip credit is $1.25. Therefore, the employer can pay $12.75 per hour as the adjusted minimum cash wage.
• Calculate the overtime rate: Multiply the regular rate by 1.5 to get the overtime rate. If the regular pay is $12.75, the overtime rate would be $19.13 ($12.75 x 1.5).
• Identify the overtime hours: All hours worked beyond 40 in a workweek are counted as overtime. If the employee worked 48 hours, the overtime hours would be eight (48 – 40).
• Calculate the overtime pay: Multiply the overtime rate by the overtime hours. If an employee’s overtime rate is $19.13 and worked eight additional hours, the overtime pay would be $153.04 ($19.13 x 8).

Overtime for Agricultural Employees in Hawaii

In Hawaii, certain agricultural employers have exemptions regarding employee overtime pay calculation.

Types of Employers Covered:

• Those who process milk, sugar cane, or agricultural products.
• Those whose products are processed by another seasonal or packing employer.
• Those involved in the initial processing or packing of seasonal fresh fruits.

Exemption Period:

• These employers can choose up to 20 different workweeks in a year (starting from July 1) where they don’t need to pay overtime for hours worked beyond 40 in a week.
• However, they must pay overtime for hours worked beyond 48 in those exempted workweeks.

Additional Considerations for Hawaii Overtime

Can an Employer pay Compensatory Time instead of Overtime in Hawaii?

Compensatory time or “comp time” can be paid instead of overtime in Hawaii under the following conditions:

1. Salaried Employees: Compensatory time only applies to salary employees.
2. Same Pay Period: The employee must use the compensatory time within the same pay period in which the overtime is worked.
3. Earning Rate: Compensatory time is earned at 1.5 times the number of overtime hours worked.

In conclusion, apart from the above-mentioned conditions, there is no other provision for compensatory time off under Chapter 387, HRS, Wage and Hour Law.

Applicability of Federal or State Overtime laws in Hawaii

Generally, retail or service businesses with annual gross revenues over $500,000 are subject to federal law.

Federal law also applies to businesses with employees engaged in interstate commerce, producing goods for interstate commerce, or handling goods for commerce. 

Whether the state law has a higher minimum wage or stricter overtime standards than federal law can also affect coverage.

Employees should contact the U.S. Department of Labor’s Wage and Hour Division to see if the federal Fair Labor Standards Act (FLSA) covers them.