Overtime pay
Overtime pay is 1.5 times the regular rate, owed under the FLSA for each hour a non-exempt employee works over 40 in a workweek.
- LAW
- FLSA §7(a), 29 U.S.C. §207
- BOUNDARY
- One workweek, with narrow statutory exceptions
- OT RATE
- 1.5 × the regular rate for hours over 40
- WATCH FOR
- Multiplying only the primary rate by 1.5
Federal overtime is at least 1.5 times the regular rate for each hour a non-exempt employee works over 40 in a workweekWorkweek (FLSA). A workweek under the Fair Labor Standards Act is a fixed, regularly recurring period of 168 consecutive hours used to compute overtime.Click to open the term. The regular rate can sit above the base rate when a nondiscretionary bonus or shift differentialShift differential. A shift differential, also called a shift premium, is extra pay added to an employee’s base wage for working a less desirable shift.Click to open the term is paid. Each workweek generally stands alone, so you do not average hours across two weeks. You generally pay the overtime on the regular payday for the period in which the workweek ends.
How do you calculate overtime pay?
The regular rate is not always the stated hourly wage. With two or more pay rates or classifications in one week, it is generally a weighted averageWeighted average overtime rate. The weighted average overtime rate is the federal regular rate for a week at two or more pay rates: straight-time earnings divided by hours worked.Click to open the term. By prior agreement, the FLSAFLSA. The Fair Labor Standards Act (FLSA) is the federal law setting minimum-wage, overtime, recordkeeping, and youth employment standards for covered employment.Click to open the term also permits overtime at 1.5 times the bona fide straight-time rate for the work done. Confirm multi-rate overtime against current requirements with qualified guidance.
- 01
Add up the week’s pay from every rate worked, counting most forms of pay, such as hourly wages, nondiscretionary bonuses, shift differentials, and commissions.
- 02
Divide by the total hours actually worked that workweek to get the regular rate.
- 03
Pay each hour over 40 at 1.5 times that rate. Where straight-time pay already covers every hour, the amount still owed is half the rate per overtime hour.
What does a 46-hour week pay?
The federal overtime rules work this example for an employee paid $12 an hour who works 46 hours (29 CFR 778.110). A $46 production bonus raises the regular rate to $13, and the overtime with it. Each total equals 40 hours at the regular rate plus 6 hours at 1.5 times it.
| LINE | HOURLY ONLY | WITH A $46 BONUS |
|---|---|---|
| Regular rate | $12.00 | $13.00 |
| Straight time, 46 hours | $552.00 | $598.00 |
| Half-time premium, 6 hours | $36.00 | $39.00 |
| Total for the week | $588.00 | $637.00 |
Who is entitled to overtime pay?
Only non-exempt employees are owed federal overtime. Exempt employees generally meet the FLSA’s salary and duties tests, though you may still choose to pay them extra. A few states (California, Alaska, Nevada, and Colorado among them) also require daily overtime for some or all employees. Double time, twice the regular rate, is not a federal requirement. It comes from state law, such as California’s rule for hours past 12 in a workday, a union contract, or your policy.
Can you require approval before overtime?
An overtime authorization policy can require approval before an employee works overtime, but it limits when overtime is worked, not what you owe. A policy that overtime needs advance approval does not cancel pay for overtime hours actually worked. Unauthorized overtime is work time when you suffer or permit it: you know or have reason to believe the work is being done, even at home. Announcing the rule is not enough; you must make every effort to enforce it. Record and pay the hours, and treat the policy breach separately.
Frequently asked
- Fair Labor Standards Act, 29 U.S.C. §207 (Maximum hours)
- 29 CFR Part 778, Overtime Compensation
- U.S. Department of Labor, Fact Sheet #23: Overtime Pay Requirements of the FLSA
- 29 CFR Part 785, Hours Worked
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.