Straight-time pay is the regular wages an employee earns for their standard work hours—no overtime, no extra compensation. It’s based on a set hourly rate or salary and applies mostly to non-exempt employees under labor laws. Simply put, it’s the foundation of a paycheck before factoring in bonuses, overtime, or other earnings.
Straight-time pay vs. overtime pay
The difference comes down to how employees are paid for their hours.
- Straight-time pay: The regular hourly wage or salary for standard work hours, usually up to 40 hours per week.
- Overtime pay: Extra compensation for hours worked beyond the standard workweek, typically paid at 1.5 times the regular hourly rate, as required by labor laws.
For example, if an employee makes $20 per hour and works 45 hours in a week, the first 40 hours are paid at $20 per hour (straight-time pay), while the extra 5 hours are paid at $30 per hour (overtime pay).
How to calculate straight-time pay
Calculating straight-time pay is pretty straightforward. However, the method depends on whether the employee is hourly or salaried.
For hourly employees
Formula: hourly wage × hours worked
Example: If someone earns $18 per hour and works 40 hours in a week, their straight-time pay is $18 × 40 = $720.
For salaried employees
Formula: annual salary ÷ number of pay periods
Example: If an employee makes $50,000 per year and is paid biweekly (26 pay periods), their straight-time pay per paycheck is $50,000 ÷ 26 = $1,923.08.
Straight-time pay doesn’t include overtime, bonuses, or extra incentives—just the base earnings.
Is straight-time pay better than overtime pay?
It depends on who you ask.
For employees
- Straight-time pay means steady, predictable income.
- Overtime pay offers more money but comes with longer hours.
- Some workers prefer consistency, while others take on overtime for the extra cash.
For employers
- Straight-time pay helps control labor costs.
- Overtime can get expensive but may be necessary during busy periods.
- Some companies avoid high overtime costs by hiring extra staff instead.
At the end of the day, it depends on the industry, job type, and personal preference.
Does straight-time pay apply to everyone?
Not exactly. Here’s how it works for different types of workers:
- Non-exempt employees: Paid straight-time for regular hours and overtime for extra hours, as required by labor laws.
- Exempt employees: Salaried professionals (like managers or executives) who receive a fixed salary, covering all hours worked—no overtime pay.
- Independent contractors & freelancers: Typically paid per project or contract, not hourly wages.
Understanding straight-time pay helps both employees and employers manage wages properly and stay compliant with labor laws.