How overtime pay is calculated

Overtime is the most common source of paycheck confusion — and of wage-and-hour lawsuits. The core federal rule is short: covered, non-exempt employees must receive at least 1.5 times their regular rate of pay for hours worked over 40 in a workweek. Everything interesting is in the details.

The basic formula

1. Find the regular rate: total pay for the week ÷ total hours worked.
2. The overtime premium is 0.5 × regular rate for each overtime hour (you already earned the straight-time portion).
3. Equivalent shortcut for pure hourly workers: overtime hours × hourly rate × 1.5.

Example. You earn $20/hour and work 46 hours:

• Straight time: 46 × $20 = $920
• Overtime premium: 6 × $10 = $60
• Total: $980 — the same as 40 × $20 + 6 × $30.

The regular rate is more than your hourly wage

The FLSA requires most compensation to be folded into the regular rate before computing overtime: non-discretionary bonuses, shift differentials, commissions and piece rates all count. If you earn $20/hour plus a $92 production bonus in a 46-hour week, your regular rate becomes ($920 + $92) ÷ 46 = $22/hour, and each overtime hour must pay $33, not $30. Discretionary bonuses, gifts, paid leave and expense reimbursements stay out.

Workweek, not pay period

Overtime is computed on a fixed, recurring 7-day workweek the employer defines. Working 45 hours one week and 35 the next in a biweekly pay period still produces 5 overtime hours — averaging across weeks is illegal for non-exempt employees. There is no federal daily overtime: 12 hours on Monday in a 38-hour week earns no premium under the FLSA.

State rules that go further

• California: daily overtime after 8 hours (1.5×) and after 12 hours (2×), plus 7th-consecutive-day premiums.
• Alaska, Nevada, Colorado: daily overtime after 8 or 12 hours in various forms.
• Several states restrict mandatory overtime for nurses and other safety-sensitive roles.

Where state and federal rules differ, the employee gets the more protective rule.

Who is exempt

The familiar "white-collar" exemptions cover executive, administrative, professional, outside sales and certain computer employees — but only if they pass both a duties test and a salary threshold (set by Department of Labor rulemaking and updated periodically; check dol.gov for the current figure). Job titles don't matter: a "manager" who mostly runs a register is likely non-exempt and owed overtime. Being paid a salary does not by itself remove overtime rights.

Independent contractors get no FLSA overtime at all, which is why misclassification cases are so common.

Common employer mistakes (and your rights)

• Paying "straight time" for overtime hours.
• Excluding bonuses from the regular rate.
• Off-the-clock work: prep, closing duties, mandatory training and some travel count as hours worked.
• "Comp time" instead of overtime pay — allowed for public-sector employers, generally illegal in the private sector.

Back pay claims can reach two years (three for willful violations), with liquidated (double) damages. Complaints go to the DOL Wage and Hour Division or state labor agencies.

The bottom line

Multiply carefully: your overtime rate is 1.5× your regular rate, which may be higher than your base wage. Use our overtime calculator for the quick math, and keep your own record of hours — it's the single most useful thing in a pay dispute.

Sources

• U.S. Department of Labor, Fact Sheet #23: Overtime Pay Requirements of the FLSA
• 29 U.S.C. §207; 29 C.F.R. Part 778 (regular rate)
• California DIR, Overtime guidance

Estimates for reference only, based on 2026 published rates. Not tax, legal or financial advice.