Calculating Time Off Pay

Paid time off is any time not worked by an employee for which the hourly rate is accrued and paid to the employee. Time off is granted to employees usually in the form of vacation days, holidays, personal leave, jury duty, sick leave, etc. Because the employee is not on duty and working, time off is not taken into account when calculating overtime pay. Time off pay is computed as:

Time off pay = Hourly rate * Time off hours during the work period

For example, some employee Gabby is regularly working 8 hours a day, Monday through Friday, at an hourly rate of $20 per hour. Next week, Gabby is scheduled to work Monday, Tuesday, and Wednesday, then takes Thursday and Friday off as paid vacation days. Gabby's time off pay for that week would be:

$320 = $20 per hour * 16 hours of time off