Overtime is one multiplication sitting on top of one division, and almost every argument about it is really a disagreement about what goes into the division. So start there: the rate the law protects is the one you actually earned that week, not the number on your offer letter.
What the overtime rate actually is
Under the Fair Labor Standards Act (FLSA), a nonexempt employee must be paid at least 1.5× the regular rate for hours worked beyond 40 in a workweek. Three parts of that sentence do the work:
- Nonexempt. Exempt status is decided by duties and a salary test set by the Department of Labor, not by a job title. The salary threshold has been revised and litigated more than once, so check the current figure against the DOL’s overtime page rather than trusting any page on the internet, including this one.
- Workweek. A fixed, recurring 168-hour period that can start on any day. Each workweek stands alone: a bi-weekly pay period is two separate workweeks, and quiet hours in one cannot cancel busy hours in the other.
- Regular rate. Total remuneration for the week divided by hours worked. Non-discretionary bonuses, shift differentials and commissions are part of it, which is why the regular rate can be higher than the base hourly wage and can change week to week.
Two things the federal rule does not do: it does not require a premium for weekends or holidays, and it does not cap hours. Both of those are bargaining or state-law questions. Several states count a day instead of a week, which can turn an eight-hour Tuesday into overtime hours that federal law alone would never reach — and where the two sets of rules differ, the one that pays more applies.
The four steps, in order
Hourly or salaried, every way to calculate overtime pay is the same sequence with different inputs:
- Work out the regular rate. Add everything the week paid you and divide by the hours worked. That figure, not the base wage on the offer, is what the overtime premium is computed on.
- Identify the overtime hours. Count the hours beyond 40 inside one fixed, recurring workweek. Two weeks cannot be averaged against each other, and hours over 8 in a day only count where state law says so.
- Multiply the premium and add it back. Each overtime hour is worth 1.5× the regular rate. Where the straight-time hours were already paid at the full rate for all hours, the extra owed is half the rate per overtime hour.
- Show both lines on the document. Print straight time and overtime separately, each with its hours and its rate, so anyone can re-derive the gross without asking how it was built.
Hourly employees
If you are paid one hourly rate for all hours, the regular rate is that rate, and the arithmetic is short. It gets longer the moment a bonus or a second rate enters the week: a weekly non-discretionary bonus of $100 on top of 46 hours is divided across those 46 hours to lift the regular rate before the premium is computed — which is exactly what overtime rate calculation means in payroll software, and why the amount on a stub can differ from rate × 1.5.
Worked example: $20.00 an hour, 46 hours
| Component | Hours × rate | Amount |
|---|---|---|
| Straight time | 40 × $20.00 | $800.00 |
| Overtime premium hours | 6 × $30.00 | $180.00 |
| Gross pay for the week | 46 hours | $980.00 |
A second convention produces the identical total and appears on many stubs: pay all 46 hours at the plain rate ($920.00) and add half the rate for the six overtime hours ($60.00). Same $980.00, because the time-and-a-half is one full share plus a half share. Knowing which shape your employer uses is what lets you check a stub instead of squinting at it.
Stack that week up and it is three numbers, not one: $20.00 an hour for the first forty hours, the six hours past forty at $30.00, and the bonus added on top of both.
Salaried employees
Being on a salary answers how you are paid, not whether overtime is owed. A salaried nonexempt employee still has a regular rate; you just have to unwrap it from the weekly salary first:
regular rate = weekly salary ÷ the hours that salary is intended to cover
That divisor is the whole argument in most salary-overtime disputes. If a $900 weekly salary is understood to cover 40 hours, the regular rate is $22.50 and six overtime hours are worth $202.50 at the full 1.5×, for $1,102.50 of gross. If a $900 salary is documented as covering 45 hours, then all 45 hours have already been paid at $20.00, and what is still owed on the five overtime hours is the half-share: $50.00, giving $950.00 gross.
| Situation | Regular rate | What the extra hours are worth |
|---|---|---|
| Salary covers 40 hours, 46 worked | salary ÷ 40 | 6 hours at 1.5× the rate |
| Salary documented as covering all hours worked | salary ÷ hours worked | the premium hours at 0.5× the rate |
| Exempt under a duties and salary test | not computed | no overtime is owed at all |
There is a further method for salaried employees whose hours ebb and flow, and it depends on an arrangement between employer and employee rather than on arithmetic alone. If that is the shape of your pay, ask payroll which method is in use before you conclude that a number is wrong.
How overtime shows up on your pay stub
A stub you can audit prints the two components separately, each with its own hours and rate:
- a regular-hours line — 40 hours at the base rate, or the full salary for the period;
- an overtime line — the multiplier visible in the rate itself (a $30.00 rate on six hours) or in a separate column that says how it was derived;
- a basis column on each earnings line, showing hours × rate, so gross can be re-derived without asking anyone.
A single “wages” line for $980.00 is not wrong, but it is unauditable: nothing on the document says whether those were 49 hours at $20.00 or 40 plus six at time and a half. The hourly pay stub guide walks through the basis column line by line, and it is blunt about a limit of this particular tool: the builder has no overtime multiplier field. You apply the 1.5 yourself and enter the result as its own earnings line — 6 × $30.00 as 180.00, with the hours and rate written so a reader can see where it came from. Watch gross move as you type, then export the document with both lines on it.
Six mistakes that make overtime hard to check
- Averaging two weeks. The workweek is the unit. 38 hours one week plus 44 the next is 44 hours in a workweek that earned overtime, not 41 hours on average.
- Computing the premium on the base wage only. If a differential, commission or non-discretionary bonus was paid, it belongs in the regular rate, so the premium is understated when it is left out.
- Treating a pay period as a workweek. A bi-weekly stub summarises two workweeks; overtime is decided inside each of them.
- Assuming salary means exempt. Most salaried employees are exempt, and “most” is a description of a category, not a test applied to you.
- Arguing about the multiplier before agreeing on the hours. Unpaid meal breaks, travel counted as hours worked and a workweek that starts Wednesday instead of Monday all change the answer more than 1.5 does.
- Rounding line by line. Money rounds to the cent once, at the end. Round each intermediate step and a two-cent phantom appears in a total nobody can reproduce.
Once the overtime line is in gross, the rest of the document is the ordinary subtraction — how to calculate net pay from gross pay covers it with the same numbers, the deductions guide explains what comes off after the overtime is added, and the payroll terms glossary defines regular rate, nonexempt and FICA if those words are the part that is unclear.
Frequently asked questions
Is overtime pay required for every job?
The federal rule reaches nonexempt employees: hours beyond 40 in a workweek are paid at 1.5× the regular rate. Exempt status — decided by duties and a salary test that the Department of Labor sets and revises — is what determines whether the rule reaches you at all, and a job title does not decide it.
How do I calculate overtime pay when I work two different hourly rates?
Use a weighted average. Add the pay earned at each rate, divide by the total hours worked, and treat that figure as the regular rate for the week; the overtime premium then applies to the hours past 40. The result sits between your two rates and changes week to week, which is why the hours need to be recorded per rate rather than as one total.
Does a bonus change the overtime rate?
A non-discretionary bonus is part of the regular rate, so the overtime premium has to be recalculated across the period the bonus covers — often as an extra amount per overtime hour rather than a changed hourly figure. Discretionary bonuses and expense reimbursements can sit outside the regular rate, and the line between the two is worth asking payroll about instead of assuming.
Why does the overtime on my stub not match my own arithmetic?
Usually because the two of you started from different inputs, not because the multiplier is wrong. A fixed salary is meant to cover a set number of hours, a meal break may be unpaid, a shift differential may already be folded into the regular rate, and the employer’s workweek may start on a day you did not count. Compare the regular rate line before arguing about the 1.5.