A salary does not automatically mean no overtime. If you are paid a salary but do not meet an exemption, your overtime depends on how many hours the salary is intended to cover. This guide shows the steps with a $52,000 salary, compares three methods and tells you what to check on your paycheck.
Salaried does not mean exempt
Many employees are paid a fixed salary and still must receive overtime. A salary is a method of payment, not an exemption. Unless the employee meets both the salary and the duties tests for a specific exemption, the employee is non-exempt, and the Fair Labor Standards Act (FLSA) requires at least one and one-half times the regular rate for hours over 40 in a workweek. The question this guide answers is how to calculate that overtime when the employee is paid a weekly, biweekly, semi-monthly or monthly salary. For the exemption tests themselves, read exempt vs. non-exempt employees.
The key question: how many hours does the salary cover?
Under the Department of Labor's regulation at 29 CFR 778.113, the regular rate of an employee paid a salary is found by dividing the salary by the number of hours the salary is intended to compensate. The employer and employee must have a clear understanding about that number of hours. For most salaried employees the salary is understood to cover a standard 40-hour week, so the regular rate is the weekly salary divided by 40. Some employers agree that the salary covers a longer fixed week, such as 45 hours, or a shorter one, such as 37.5. The number of hours the salary covers changes both the regular rate and the overtime due.
Step 1: convert the salary to a weekly amount
Overtime is calculated for each workweek, so start by converting the salary into a weekly salary. Divide an annual salary by 52, a monthly salary by 52 and multiply by 12, a semi-monthly salary by 24 and divide by 52, and a biweekly salary by 2.
Converting common salary periods to weekly pay
| Pay schedule | Pay per period | Weekly equivalent |
|---|---|---|
| Annual | $52,000 | $52,000 ÷ 52 = $1,000.00 |
| Monthly | $4,333.33 | $4,333.33 × 12 ÷ 52 = $1,000.00 |
| Semi-monthly | $2,166.67 | $2,166.67 × 24 ÷ 52 = $1,000.00 |
| Biweekly | $2,000.00 | $2,000 ÷ 2 = $1,000.00 |
| Weekly | $1,000.00 | $1,000.00 |
These figures all describe the same $52,000 salary. See biweekly vs. semi-monthly pay for why the checks differ in size while the annual total stays the same.
Step 2: the regular rate
Divide the weekly salary by the hours it covers. If the $1,000 weekly salary covers 40 hours, the regular rate is $1,000 ÷ 40 = $25.00 an hour. If the salary covers 45 hours, the regular rate is $1,000 ÷ 45 = $22.22. The first approach produces a higher regular rate, and a higher overtime payment.
Step 3: the overtime
When the salary covers a 40-hour week, the salary pays for the first 40 hours at straight time. Each hour over 40 is paid at 1.5 times the regular rate, in addition to the salary. In a 50-hour week at $25.00 an hour, the employee receives the $1,000 salary plus 10 × $37.50 = $375.00, for $1,375.00.
When the salary covers a longer fixed week, such as 45 hours, the hours between 40 and 45 are already paid at straight time through the salary, so only the half-time premium is owed for those hours. Hours beyond the covered 45 hours are paid at 1.5 times the regular rate. In a 50-hour week with a $1,000 salary covering 45 hours, the regular rate is $22.22, the premium on hours 41 to 45 is 5 × 0.5 × $22.22 = $55.56, and the 5 hours beyond 45 are paid at 1.5 × $22.22 = $33.33 each, or $166.67. Total pay is about $1,222.22 (the rounded pieces add to a cent more).
The same 50-hour week on a $1,000 weekly salary, three ways
| Method | Regular rate | Overtime pay owed | Total for the week |
|---|---|---|---|
| Salary covers 40 hours | $25.00 | 10 × $37.50 = $375.00 | $1,375.00 |
| Salary covers a fixed 45-hour week | $22.22 | About $222.22 (rounded from $55.56 + $166.67) | $1,222.22 |
| Fluctuating workweek (salary covers all hours worked) | $20.00 | 10 × $10.00 = $100.00 | $1,100.00 |
The third row is the fluctuating workweek method, which is lawful only when its conditions are met; see fluctuating workweek overtime. The sizable differences explain why the question of how many hours the salary covers is the one that most often decides disputes.
Which method applies to you?
- Look for a written statement of the hours the salary covers in your offer letter, handbook or pay policy.
- If the document says the salary covers all hours worked, however many, and your hours really vary, the fluctuating workweek method may be in use.
- If there is no clear understanding about longer hours, the salary is generally treated as covering a standard 40-hour week, which produces the most favorable calculation for the employee under federal rules.
- In California, state law sets the regular rate for a full-time salaried non-exempt employee at one-fortieth of the weekly salary, and the fluctuating workweek method is not allowed. Other states may have their own rules.
A complete example from a monthly salary
Suppose a non-exempt employee has a monthly salary of $4,333.33 that covers a 40-hour week, and works 46 hours in one week. The weekly salary is $4,333.33 × 12 ÷ 52 = $1,000.00, so the regular rate is $1,000 ÷ 40 = $25.00. Overtime is 6 × 1.5 × $25.00 = $225.00, so pay for the week is $1,225.00. In a 38-hour week, the employee still receives the $1,000.00 salary, because a salary is a fixed amount. If the employee also earns a nondiscretionary production bonus, that bonus must be added when the regular rate is calculated, which raises the overtime due; read how bonuses affect overtime pay for the method.
Check your own overtime
- Find your weekly salary using the table above.
- Decide how many hours your salary covers, using the offer letter or handbook.
- Compute the regular rate and the overtime with the formulas, or enter your hourly equivalent in the Overtime Pay Calculator. The Hourly to Salary Calculator converts between hourly and annual pay.
- Total your actual hours with the Weekly Time Card Calculator.
- Compare the result with your pay stub; see how to read a pay stub, and raise any difference with payroll in writing.
Frequently Asked Questions
How do I calculate overtime for a salaried non-exempt employee?
Convert the salary to a weekly amount, divide by the number of hours the salary is intended to cover (usually 40) to get the regular rate, then pay 1.5 times that rate for hours over 40, in addition to the salary.
What is the hourly rate for a $52,000 salary?
$52,000 ÷ 52 weeks = $1,000 a week. Divided by 40 hours, the regular rate is $25.00 an hour, and overtime is $37.50 an hour.
Does a salary cover all hours worked?
Only if the employer and employee have a clear understanding that it does and the fluctuating workweek conditions are met. Otherwise a salary is treated as covering a fixed number of hours, typically 40.
Are salaried employees entitled to overtime?
Yes, if they do not meet an exemption. Being paid a salary does not exempt an employee from overtime.
How is overtime calculated in California for salaried non-exempt workers?
California sets the regular rate at one-fortieth of the weekly salary for a full-time salaried non-exempt employee, and daily overtime rules also apply.
Can my employer say my salary covers 50 hours?
It can agree that a salary covers a fixed number of hours, but the regular rate is then the salary divided by that number, premium pay is still owed for hours over 40, and the agreement must be clear. State law may limit this approach.
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.