What Is Overtime Pay? Rules and How to Calculate It
Overtime pay is one of those topics that seems straightforward until you're actually in the middle of a work situation where it matters. The federal rules are clear in principle but full of exceptions in practice. Here's what you actually need to know.
The Federal Baseline
Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive overtime pay at a rate of at least 1.5 times their regular rate of pay for every hour worked over 40 in a single workweek.
That's the federal floor. Some states have stricter rules — California, for example, requires overtime for hours over 8 in a single day, not just hours over 40 in a week. Where federal and state rules conflict, whichever is more beneficial to the employee applies.
Who Qualifies for Overtime?
The key question is whether you're "exempt" or "non-exempt" from the FLSA's overtime provisions.
Non-exempt workers — who must receive overtime — generally include:
- Hourly workers in most industries
- Salaried workers earning below $684/week ($35,568/year)
- Many blue-collar workers regardless of pay level
Exempt workers — who do not receive overtime — generally include employees who:
- Earn at least $684/week on a salary basis, AND
- Work in an executive, administrative, professional, computer, or outside sales role (the "white-collar exemptions")
The key word in exempt status is "and" — both the salary level and the job duties test must be met. An employee making $80,000/year who is misclassified as exempt when their job is actually non-exempt work is entitled to overtime pay, and their employer faces legal liability.
What Counts as "Hours Worked"?
This matters more than most workers realize. The FLSA counts all time your employer "suffers or permits" you to work — including:
- Time before your official shift if you're working
- Work done from home after hours
- Time spent on required training
- Certain travel time
- Waiting time if you're required to remain at the worksite
What generally doesn't count: your commute to work, bona fide meal breaks (typically 30+ minutes with no work duties), and off-the-clock recreational time at employer events.
How to Calculate Your Overtime Rate
For most hourly workers, the calculation is simple:
Overtime rate = Regular hourly rate × 1.5
Example: If you earn $20/hour and work 48 hours in a week:
Regular pay = 40 hours × $20 = $800
Overtime pay = 8 hours × $30 (=$20 × 1.5) = $240
Total pay = $1,040
Use our overtime calculator to run these numbers instantly.
The Trickier Cases
Workers who receive bonuses: If you receive a non-discretionary bonus (one tied to hours worked, production, or a set formula), it affects your "regular rate of pay" for overtime purposes. You may be owed more overtime than just 1.5x your hourly wage.
Workers with multiple pay rates: If you work at two different rates during a week (say, $18/hour for regular work and $25/hour for specialized tasks), overtime is calculated based on a weighted average of the two rates.
Salaried non-exempt workers: Some salaried workers are non-exempt. For these workers, overtime is calculated by dividing their weekly salary by the hours they're expected to work (their "regular rate"), then paying 1.5x that rate for overtime hours.
State-Level Variations
Several states have overtime rules that go beyond federal requirements:
- California: Daily overtime (over 8 hours/day), double time (over 12 hours/day or over 8 hours on the 7th consecutive day)
- Alaska and Nevada: Daily overtime over 8 hours
- Colorado: Daily overtime over 12 hours
- Many states: Higher salary thresholds for exempt status than the federal minimum
What If You Think You're Being Underpaid?
Wage theft — including unpaid overtime — is unfortunately common. If you think your employer isn't paying you properly:
- Document everything. Keep records of your hours worked, ideally with timestamps. Save any communications that show you were expected to work or did work.
- Review your pay stubs. Check whether overtime hours are being compensated at the correct rate.
- File a wage claim. You can file with the U.S. Department of Labor's Wage and Hour Division or your state labor board. Most claims are free and the agencies investigate on your behalf.
- Consult an employment attorney. Many work on contingency for wage claims — meaning no upfront cost to you. The FLSA allows recovery of back wages, liquidated damages (double the unpaid amount), and attorney fees.
The statute of limitations for FLSA claims is generally 2 years (3 years for willful violations), so don't wait too long.
Common Myths About Overtime
Myth: Comp time is legal instead of overtime pay.
In the private sector, employers generally cannot offer compensatory time off in lieu of overtime pay. This is permitted for government employees, not private sector workers.
Myth: My employer can average hours across two weeks.
No. The FLSA uses a single workweek as the unit. If you work 50 hours one week and 30 the next, you're owed overtime for the 10 hours over 40 in week one — the weeks can't be averaged.
Myth: Calling me a manager makes me exempt.
Job titles don't determine exempt status. Your actual job duties do. An employee titled "assistant manager" who spends most of their time doing the same work as hourly employees likely doesn't meet the duties test for the executive exemption.
Bottom Line
Know your classification, track your hours, and understand what you're owed. Overtime law exists to protect workers, and the calculation isn't complicated once you understand the rules. When in doubt, run the numbers with our overtime calculator and compare against what you received.