Overtime pay is one of the most commonly misunderstood aspects of employment compensation. Many workers — and even some employers — are unclear on when overtime applies, how it is calculated, and which workers are entitled to it. This guide covers everything you need to know, from the basics of time-and-a-half to the specific rules around double time, salary thresholds, and exempt vs. non-exempt status.
What Is Overtime Pay?
Overtime pay is a premium wage rate paid for hours worked beyond a legally defined threshold — typically 40 hours per week in the United States. The Fair Labor Standards Act (FLSA) establishes the federal baseline: non-exempt employees must be paid at least 1.5× their regular hourly rate (commonly called “time-and-a-half”) for all hours worked over 40 in a workweek.
Key definitions:
- Regular rate: Your standard hourly wage (base pay)
- Overtime rate: 1.5× your regular rate for hours over 40/week
- Double time: 2× your regular rate — required in some states and industries
How to Calculate Overtime Pay: Step-by-Step
Time-and-a-Half (Federal Standard)
Formula: Overtime Pay = Regular Hourly Rate × 1.5 × Overtime Hours
Example: An employee earning $18/hour works 47 hours in one week.
- Regular pay: 40 × $18 = $720
- Overtime pay: 7 × ($18 × 1.5) = 7 × $27 = $189
- Total weekly pay: $909
Double Time
Some states (notably California) and some union contracts require double-time pay in specific situations.
Formula: Double Time Pay = Regular Hourly Rate × 2 × Double-Time Hours
Example: A California worker at $20/hour works 12 hours in one day.
- First 8 hours: 8 × $20 = $160 (straight time)
- Hours 8–12: 4 × $30 = $120 (time-and-a-half, California daily rule)
- Over 12 hours: $40/hour (double time)
Overtime by State: Key Variations
| State | Daily OT Threshold | Weekly OT Threshold | Double-Time Trigger |
|---|---|---|---|
| Federal (FLSA) | None | 40 hours | None required |
| California | 8 hours/day | 40 hours | 12+ hours/day or 7th consecutive day |
| Colorado | 12 hours/day | 40 hours | Not required by state law |
| Alaska | 8 hours/day | 40 hours | Not required |
| Nevada | 8 hours/day (if under $14.25/hr) | 40 hours | Not required |
Always check your state’s Department of Labor regulations, as state law takes precedence when it is more favorable to the employee.
Exempt vs. Non-Exempt Employees
Not all workers qualify for overtime. The FLSA divides employees into two categories:
Non-exempt employees are entitled to overtime:
- Most hourly workers
- Salaried workers earning less than $684/week ($35,568/year as of 2024)
Exempt employees are NOT entitled to FLSA overtime:
- Executive, administrative, and professional workers earning above the salary threshold
- Outside salespeople
- Certain computer employees earning over $27.63/hour
- Highly compensated employees earning over $107,432/year
Being classified as salaried does NOT automatically make you exempt. The job duties and salary level both determine exemption status.
How to Calculate Overtime for Salaried Non-Exempt Employees
If you are a salaried, non-exempt employee, your regular hourly rate is calculated by dividing your weekly salary by the number of hours the salary is intended to cover (typically 40 hours).
Example: A salaried employee earning $800/week (non-exempt) works 48 hours.
- Regular rate: $800 ÷ 40 = $20/hour
- Overtime premium: 8 × ($20 × 0.5) = $80 (the “half” in time-and-a-half, since base pay is already covered)
- Total pay: $880
Common Overtime Calculation Mistakes to Avoid
1. Forgetting to include bonuses in the regular rate. Non-discretionary bonuses (performance bonuses, attendance bonuses) must be included in the regular rate calculation for overtime purposes.
2. Averaging hours across weeks. Overtime is calculated on a workweek basis — you cannot average two 50-hour weeks with two 30-hour weeks to avoid paying overtime.
3. Compensatory time in private sector. Private-sector employers cannot offer “comp time” (time off) instead of overtime pay. Only state and local government employers may do this.
4. Misclassifying employees as independent contractors. Contractors are not covered by FLSA overtime rules, but misclassification is illegal and carries significant penalties.
Using the Overtime Calculator
Our free Overtime Calculator takes the complexity out of overtime math. Simply enter your:
- Regular hourly wage
- Total hours worked in the week
- State (for daily overtime rules)
- Any applicable shift differentials or bonuses
You will instantly see your regular pay, overtime pay, total gross pay, and a breakdown by hour type. The calculator handles federal FLSA rules as well as California’s more complex daily overtime and double-time requirements.
If you work in a salaried position and believe you may be misclassified as exempt, the U.S. Department of Labor’s Wage and Hour Division offers free consultations and investigations.