How to Calculate Overtime Pay
Overtime pay is the extra you earn for working more than 40 hours in a workweek. Under the federal Fair Labor Standards Act (FLSA), nonexempt employees must be paid at least time-and-a-half — 1.5 times their regular rate — for those extra hours. The math is simple once you know your regular rate: multiply it by 1.5, then by your overtime hours. Here's how to do it right and sidestep the usual mistakes.
The FLSA basics
The FLSA is the federal law that sets minimum wage and overtime rules. Its core overtime rule is straightforward: covered, nonexempt employees earn 1.5x their regular rate for hours worked beyond 40 in a single workweek. A workweek is a fixed, recurring period of seven consecutive days — it doesn't have to match the calendar week, but your employer must define it consistently.
Two important points. First, overtime is based on a single workweek, not a pay period — so if you're paid biweekly, each week is evaluated on its own. Second, the federal rule keys off hours over 40 per week; there's no federal "over 8 hours a day" rule. Some states add their own protections (like daily overtime), so always check your state's rules too.
Exempt vs. nonexempt
Not everyone is entitled to overtime. The FLSA divides workers into nonexempt (entitled to overtime) and exempt (not entitled). Exempt status generally requires meeting tests around job duties and being paid a salary above a threshold the Department of Labor sets and updates over time.
- Nonexempt: Most hourly workers and many salaried workers below the threshold — they get overtime.
- Exempt: Typically certain salaried executive, administrative, and professional roles that meet the duties and salary tests — they generally don't.
Being salaried does not automatically make someone exempt. Misclassification is a common and costly error, so if you're unsure, confirm against current Department of Labor guidance.
Finding your "regular rate"
Overtime is built on your regular rate of pay, and that's where many calculations go wrong. The regular rate isn't always just your base hourly wage — it must include most forms of compensation, such as nondiscretionary bonuses and certain shift differentials, averaged over the hours you worked.
For a straightforward hourly employee with no bonuses, the regular rate equals the hourly wage. But if you earn a production bonus or shift premium, those amounts get folded in, which can nudge your regular rate — and therefore your overtime rate — higher than your base wage alone.
A quick way to find it: add up everything you earned in the week that counts toward the regular rate, then divide by the total hours you worked. That gives a single per-hour figure. The extra "half-time" premium for overtime hours is then calculated on that blended rate, not just your base wage. It's a small distinction that, multiplied across many overtime hours, can add up to real money — which is exactly why employers and employees alike should get the regular rate right before touching the multiplier.
A worked example
Say you earn $20 an hour and work 46 hours in a workweek. Here's the calculation:
| Step | Math | Result |
|---|---|---|
| Regular hours (40) | 40 × $20 | $800.00 |
| Overtime rate | $20 × 1.5 | $30.00/hr |
| Overtime hours (6) | 6 × $30 | $180.00 |
| Total gross pay | $800 + $180 | $980.00 |
Those 6 overtime hours earned you $180 instead of the $120 they'd pay at straight time — an extra $60. Want to skip the arithmetic? Our overtime pay calculator does it instantly for any wage and hours, including a different overtime multiplier if your state or employer offers double-time.
Now imagine a slightly trickier case: you earned a $40 nondiscretionary production bonus that week on top of your hourly wage. That bonus has to be folded into the regular rate. With $800 in base wages plus the $40 bonus over 46 hours, your blended regular rate rises above $20, which lifts the overtime premium too. The dollar difference may be small in a single week, but it's the kind of detail that distinguishes a correct paycheck from one that quietly shortchanges the worker.
Common mistakes to avoid
Overtime errors are surprisingly common. Watch for these:
- Averaging across two weeks. Overtime is per workweek. Working 30 hours one week and 50 the next isn't "80 hours, no overtime" — the second week has 10 overtime hours.
- Forgetting bonuses in the regular rate. Nondiscretionary bonuses and shift differentials usually must be included, which raises the overtime rate.
- Assuming salaried means no overtime. Salaried, nonexempt employees can still be owed overtime.
- Counting paid time off as hours worked. Holiday pay, vacation, and sick leave generally don't count toward the 40-hour overtime threshold under federal rules.
- Ignoring state law. Some states require daily overtime or double-time, which can mean more than the federal minimum.
- Rounding away time. Small amounts of work before or after a shift still count. Consistently rounding hours down can shortchange pay over time.
If you ever spot a discrepancy on your own paycheck, start by recreating the math for that single workweek: total hours, regular rate, anything over 40 at 1.5x. More often than not the issue traces back to one of the mistakes above — a missed bonus in the rate, or two weeks averaged together.
The bottom line
Calculating overtime comes down to three things: confirm you're nonexempt, pin down your true regular rate, and apply the 1.5x multiplier to hours over 40 in each workweek. Get the regular rate right — bonuses included — and evaluate each week separately, and the math falls into place. When in doubt, check your state's rules and current Department of Labor guidance, since thresholds and protections can change. For a quick, accurate estimate, let the overtime pay calculator handle the numbers, and the paycheck calculator can show your take-home after taxes.
This article is general information, not financial advice, and figures are estimates. Rules and rates change — confirm current details for your situation. See our disclaimer.