Overtime pay is one of the most misunderstood parts of an hourly paycheck. This guide explains exactly how overtime is calculated under U.S. federal law, walks through real examples, and shows where state rules change the math.
The basic overtime rule under the FLSA
The federal Fair Labor Standards Act (FLSA) requires that covered, non-exempt employees be paid at least 1.5 times their regular rate of pay for every hour worked over 40 in a single workweek. This higher rate is what people mean by "time and a half."
A workweek is any fixed, recurring period of 168 hours — seven consecutive 24-hour days. It does not have to match the calendar week or your pay period. Overtime is calculated one workweek at a time and cannot be averaged across two weeks, even if you are paid every two weeks.
The overtime formula
Once you know your regular hourly rate and total hours for the week, the math is straightforward:
- Regular pay = regular rate × hours up to 40
- Overtime pay = regular rate × 1.5 × hours over 40
- Gross pay = regular pay + overtime pay
Worked example
Suppose you earn $18.00/hour and worked 46 hours this week. You have 40 regular hours and 6 overtime hours:
- Regular pay: 40 × $18.00 = $720.00
- Overtime rate: $18.00 × 1.5 = $27.00/hour
- Overtime pay: 6 × $27.00 = $162.00
- Gross pay: $720.00 + $162.00 = $882.00
States with daily overtime rules
Federal law only requires overtime after 40 hours in a week. Several states go further and require daily overtime, meaning you can earn overtime even in a week with fewer than 40 total hours.
Examples of stricter state overtime rules
| State | Daily overtime (1.5×) | Double-time (2×) |
|---|---|---|
| California | After 8 hours/day | After 12 hours/day |
| Alaska | After 8 hours/day | — |
| Nevada | After 8 hours/day (below 1.5× min wage) | — |
| Colorado | After 12 hours/day | — |
When state and federal rules differ, employees are entitled to whichever calculation results in greater pay. For a state-aware calculation, choose your state on the state time card calculators or read our California overtime example below.
Who is eligible for overtime?
Overtime protections apply to "non-exempt" employees. Many salaried workers in executive, administrative, and professional roles are "exempt" if they meet specific duties tests and earn above a salary threshold. Job title alone does not decide exemption — the actual duties and pay structure do. Our guide on exempt vs. non-exempt status walks through each test in detail.
The "regular rate" is not always your hourly rate
This is the single most common source of underpaid overtime. The FLSA does not say overtime is 1.5× your base hourly wage — it says 1.5× your regular rate. The regular rate is your total straight-time earnings for the week divided by the total hours you actually worked, and it must include several kinds of pay beyond your base wage.
What goes into the regular rate
| Included in the regular rate | Excluded from the regular rate |
|---|---|
| Nondiscretionary bonuses (production, attendance, safety) | Truly discretionary bonuses decided at the employer's sole option |
| Shift differentials (night, weekend premiums) | Gifts and holiday gifts not tied to performance |
| Commissions | Paid time off, holiday pay, and sick pay (hours not worked) |
| On-call pay and hazard pay | Reimbursement of genuine business expenses |
A "nondiscretionary" bonus is one you were promised in advance for meeting a condition — hitting a production target, perfect attendance, or a safety record. Because you effectively earned it by working, it raises your regular rate for the weeks it covers, and your overtime must be recalculated on the higher rate.
Worked example: a bonus raises your overtime
Suppose you earn $20.00/hour, worked 45 hours, and received a $100 production bonus for that week.
- Straight-time earnings: 45 × $20.00 = $900.00, plus the $100 bonus = $1,000.00
- Regular rate: $1,000.00 ÷ 45 hours = $22.22/hour (not $20.00)
- Overtime premium owed: 5 hours × ½ × $22.22 = $55.55
- Total due: $1,000.00 + $55.55 = $1,055.55
If your employer had paid overtime on the $20.00 base rate and ignored the bonus, you would have been shorted. When a bonus covers several weeks — a quarterly bonus, for example — it generally has to be spread across the weeks it was earned and the overtime recomputed for each of those weeks.
If you work two different rates in one week
Some employees work more than one job for the same employer at different pay rates — a server who also does prep work, or a caregiver who covers a higher-paid overnight shift. In that case the default method is a weighted average: add all straight-time earnings for the week, then divide by total hours worked to find the regular rate.
Worked example: two rates
- 30 hours as a server at $12.00/hour = $360.00
- 15 hours doing prep at $16.00/hour = $240.00
- Total: 45 hours and $600.00 in straight-time pay
- Regular rate: $600.00 ÷ 45 = $13.33/hour
- Overtime premium: 5 hours × ½ × $13.33 = $33.33, for $633.33 total
An employer and employee can agree in advance to instead pay overtime at 1.5× the rate of the job performed during the overtime hours, but that agreement has to be made before the work is done — not chosen afterwards because it produces a smaller check.
Salaried does not mean exempt
Being paid a salary is a method of payment, not an exemption from overtime. A salaried employee who does not meet one of the FLSA's exemption tests is "salaried non-exempt" and is still owed overtime. To find the regular rate, divide the salary by the number of hours the salary is intended to compensate.
For example, if your $800 weekly salary is understood to cover a 40-hour week, your regular rate is $800 ÷ 40 = $20.00/hour. Work 46 hours and you are owed an additional 6 × $30.00 = $180.00 in overtime on top of the salary. Exemption depends on how you are paid, how much you are paid, and — critically — what you actually do all day. See exempt vs. non-exempt for the three tests that decide it.
Can my employer give me time off instead of overtime pay?
For private-sector employers, generally no. "Comp time" in place of cash overtime is not permitted under the FLSA for private employers; overtime hours must be paid in wages for the workweek in which they were earned. State and local government agencies are treated differently and may provide compensatory time off at 1.5 hours per overtime hour under specific conditions and caps.
Note also that offering "a day off next week" does not erase overtime for this week, because overtime is calculated one workweek at a time and cannot be averaged across weeks.
What to do if you think you were underpaid
- Keep your own record of hours worked each day — start time, end time, and unpaid break length. Your own contemporaneous notes matter if the employer's records are incomplete.
- Compare your pay stub against the math above, including any bonuses or shift differentials that should have raised your regular rate.
- Raise it with payroll or HR first in writing. Many shortfalls are genuine payroll configuration errors and are corrected quickly.
- If it is not resolved, you can contact the U.S. Department of Labor's Wage and Hour Division, which investigates wage complaints at no cost to the worker. Many states also have their own labor agency, and some state laws are more protective than federal law.
Time limits apply to wage claims, and they are shorter than most people expect, so it is worth acting promptly rather than waiting to see whether the next paycheck corrects itself.
Common overtime mistakes to watch for
- Averaging hours across two weeks of a biweekly pay period (not allowed).
- Paying overtime only on the base rate when bonuses should raise the regular rate.
- Treating paid holidays or PTO hours as "hours worked" that count toward the 40-hour threshold.
- Assuming salaried automatically means exempt from overtime.
- Offering comp time instead of cash overtime at a private-sector employer.
Frequently Asked Questions
How do I calculate time and a half?
Multiply your regular hourly rate by 1.5 to get your overtime rate, then multiply that by the number of hours you worked over 40 in the week. For example, at $18/hour your overtime rate is $27/hour.
Is overtime calculated daily or weekly?
Under federal law, overtime is based on hours over 40 in a workweek. Some states — like California and Alaska — also require daily overtime after 8 hours in a single day.
Do paid holidays count toward overtime?
Generally no. The FLSA only requires overtime for hours actually worked. Paid holidays, vacation, and sick time usually do not count toward the 40-hour weekly threshold unless your employer's policy says otherwise.
Can my employer average my hours across two weeks?
No. Even on a biweekly pay schedule, overtime must be calculated separately for each workweek. Hours cannot be averaged to avoid paying overtime.
Related tools & guides
This guide is for general informational purposes only and is not legal, tax, or financial advice. Labor laws vary by state and change over time. Confirm your specific situation with your employer, HR department, or the U.S. Department of Labor.