How to Calculate Overtime Pay (Step-by-Step with Examples)

Overtime pay is one of the most frequently misunderstood parts of a paycheck. Employees sometimes believe they are being shorted; employers sometimes miscalculate the "regular rate" when multiple pay types are involved. This guide walks through the federal formula, state variations, four worked examples, and the most common mistakes that lead to errors on both sides.

What Counts as Overtime Under Federal Law?

Under the Fair Labor Standards Act (FLSA), overtime applies to any hours worked beyond 40 hours in a single workweek for non-exempt employees. The minimum overtime rate is 1.5 times the employee's regular rate of pay — commonly called "time-and-a-half."

A workweek is any fixed, recurring 168-hour period (7 consecutive 24-hour days). Your employer sets when the workweek starts; it does not need to begin on Monday. Overtime cannot be averaged across two weeks — each workweek stands alone.

Exempt vs. Non-Exempt: Who Qualifies

Not all employees are entitled to overtime. The FLSA defines two categories:

• Non-exempt employees are covered by FLSA overtime rules. This includes most hourly workers and salaried employees earning below the federal salary threshold (currently $684/week as of the most recent update — verify at dol.gov).
• Exempt employees are not entitled to overtime. To qualify as exempt, an employee generally must meet both a salary-level test AND a duties test (executive, administrative, professional, outside sales, or computer employee exemptions). Job title alone does not determine exempt status.

If you are unsure of your classification, check your offer letter or ask HR. Misclassification is one of the most common wage violations and can result in back-pay obligations for employers.

The Standard Overtime Formula

Overtime Pay = Regular Hourly Rate × 1.5 × Overtime Hours

Total Weekly Pay = (Regular Rate × 40) + (Regular Rate × 1.5 × OT Hours)

Example 1: Standard Single-Rate Hourly Employee

You earn $18/hour and worked 47 hours this week.

• Regular pay: 40 × $18 = $720.00
• Overtime hours: 47 − 40 = 7 hours
• Overtime rate: $18 × 1.5 = $27.00/hour
• Overtime pay: 7 × $27.00 = $189.00
• Total weekly pay: $720 + $189 = $909.00

Example 2: California Daily Overtime

California has the strictest overtime rules in the country. Daily overtime (over 8 hours in a single day) triggers time-and-a-half before any weekly threshold is crossed. Double time (2×) applies after 12 hours in a day or after 8 hours on a seventh consecutive workday.

You earn $20/hour in California and worked: Mon 10 hrs, Tue 9 hrs, Wed 8 hrs, Thu 8 hrs, Fri 8 hrs = 43 total hours.

• Monday: 8 reg + 2 OT = (8 × $20) + (2 × $30) = $160 + $60 = $220
• Tuesday: 8 reg + 1 OT = (8 × $20) + (1 × $30) = $160 + $30 = $190
• Wed/Thu/Fri: 8 reg each = $160 each = $480
• Total: $220 + $190 + $480 = $890

Under federal (FLSA) rules, 43 hours would produce only 3 hours of OT. California's daily rule creates 3 hours of daily OT here — resulting in the same overtime pay amount in this case, but by a different calculation path. The daily vs weekly distinction can produce very different results depending on how hours are distributed.

Example 3: Employee with a Flat-Sum Bonus (Blended Rate)

When a non-discretionary bonus is part of compensation, it must be included in the "regular rate" before overtime is calculated. Simply multiplying base pay by 1.5 is not sufficient.

You earn $16/hour, worked 48 hours this week, and received a $96 weekly attendance bonus.

• Total straight-time pay: 48 × $16 = $768
• Add bonus: $768 + $96 = $864
• Effective regular rate: $864 ÷ 48 hours = $18.00/hour
• Additional overtime premium: 8 OT hours × ($18 × 0.5) = 8 × $9 = $72
• Total: $864 + $72 = $936

The additional $0.5 (not $1.5) is used because the straight-time portion for all 48 hours is already included in the $864 base calculation.

Example 4: Salaried Non-Exempt Employee

Some salaried employees are non-exempt and still entitled to overtime. Their regular rate is calculated by dividing their weekly salary by their expected weekly hours.

You earn $800/week salary, are expected to work 40 hours, and worked 50 hours.

• Regular rate: $800 ÷ 40 = $20.00/hour
• Overtime hours: 10
• Overtime premium: 10 × ($20 × 0.5) = $100
• Total: $800 + $100 = $900

State Overtime Rules Beyond Federal

Several states have overtime rules that are more generous than the federal FLSA minimum. Employers in those states must follow whichever rule benefits the employee more.

• California: Daily OT (8+ hrs/day), weekly OT (40+ hrs/week), double time after 12 hrs/day or on the 7th consecutive day.
• Nevada: Daily OT for employees earning below 1.5× minimum wage.
• Alaska: Daily OT after 8 hours in a day AND weekly after 40 hours.
• Colorado: Daily OT after 12 hours in a day.
• New York, Texas, Florida: Follow federal FLSA with no additional daily threshold.

See our full overtime rules by state guide for a state-by-state breakdown.

Common Overtime Calculation Mistakes

• Forgetting to include bonuses in the regular rate. Non-discretionary bonuses, commissions, and shift differentials must be factored in.
• Averaging hours across two workweeks. FLSA does not allow this. Each 7-day workweek is calculated independently.
• Using salary ÷ 52 ÷ 40 incorrectly for variable-hour employees. Use actual hours worked in the workweek, not assumed standard hours.
• Misclassifying employees as exempt. If an employee does not pass both the salary-level AND duties test, they are non-exempt regardless of their title.

Frequently Asked Questions

Do I get overtime if I work more than 8 hours in a day?

Under federal law, no — the FLSA threshold is weekly, not daily. However, California, Nevada, Alaska, and Colorado have daily overtime rules. Check your state's labor law or your employment contract for daily thresholds.

Can my employer give me comp time instead of overtime pay?

Private-sector employees generally cannot waive overtime pay in exchange for comp time under FLSA. State and local government employers have more flexibility for comp time arrangements. If you believe you are owed unpaid overtime, contact your state's Department of Labor.

What happens if my employer pays me salary — am I still eligible?

Not automatically. Salaried status does not equal exempt status. If your salary is below the FLSA threshold or your job duties do not meet the exemption test, you are non-exempt and entitled to overtime. Ask your HR department for your official FLSA classification.

Does holiday pay count toward the 40-hour overtime threshold?

Under FLSA, hours not actually worked (including paid holidays and vacation) do not count toward the 40-hour overtime threshold. Overtime is triggered only by actual hours worked. Some state laws or collective bargaining agreements may differ.

Can my employer change my start-of-workweek day to avoid overtime?

Employers can set — and occasionally change — their workweek definition, but only for legitimate business reasons. The DOL prohibits changing workweek start days solely to reduce overtime obligations. Such changes can trigger back-pay liability.