How Overtime Pay Is Calculated (and When You Are Owed It)
The federal rule: 1.5× the regular rate over 40 hours
The Fair Labor Standards Act (FLSA) requires employers to pay non-exempt employees at least one and a half times their regular rate of pay for every hour worked over 40 in a workweek. A workweek is a fixed, regularly recurring period of seven consecutive days, 168 hours. Your employer picks when it starts, but once set it cannot be shifted around to dodge overtime, and hours from two weeks cannot be averaged. Federal law has no daily overtime and no premium for weekends or holidays as such; a 14-hour Saturday in a 38-hour week earns straight time under the FLSA. The overtime pay calculator does the math for a single week.
"Non-exempt" covers most hourly workers and many salaried ones. To be exempt from overtime you generally have to be paid on a salary basis, at or above the federal salary level, and actually perform executive, administrative or professional duties. A title or a salary alone does not make you exempt. The federal salary floor for those exemptions is $684 a week ($35,568 a year) after a court vacated the 2024 rule that would have raised it; some states set a higher floor.
The regular rate is not always your hourly rate
Overtime is figured on the regular rate: all pay for the week for hours worked, divided by hours worked. For a plain hourly worker that is the hourly rate. But the regular rate must include nondiscretionary bonuses (production, attendance, safety, retention or any bonus promised in advance), shift differentials, on-call pay and commissions. It leaves out genuinely discretionary bonuses, gifts, paid time off, expense reimbursements and premium pay you already received for overtime. So in a week with a bonus the overtime rate goes up, and the bonus itself carries an overtime premium. If you do two jobs for the same employer at two rates, the regular rate is the weighted average of the week's pay unless you agreed in advance to overtime at the rate for the work being done.
States with daily overtime
States can require more than the FLSA, and when they do, whichever rule pays you more applies. California pays time and a half after 8 hours in a workday as well as after 40 in a week, double time after 12 hours in a day, and has its own rules for the seventh consecutive day of work. Alaska, Nevada and Colorado each have daily overtime rules with their own conditions and thresholds. Check your state labor department's current rule before assuming the 40-hour test is the whole story.
Salaried, tipped and piece-rate workers
A salaried non-exempt employee still earns overtime. The regular rate is the weekly salary divided by the hours the salary is meant to cover, usually 40: a $1,000 weekly salary for 40 hours is a $25 regular rate (the hourly to salary calculator converts either way), and hour 41 pays $37.50. Under a fluctuating-workweek arrangement, which requires a clear understanding that the fixed salary covers all hours worked, the regular rate is salary ÷ actual hours and the overtime premium is half that rate; find out which arrangement you are on. For tipped employees the overtime rate is based on the full minimum wage, not the lower cash wage; the employer may still take the tip credit, but not against the overtime premium. For piece-rate work, total piece earnings ÷ total hours is the regular rate, and each overtime hour earns an extra half of it on top of the piece pay.
What is not overtime
- Comp time. Private employers cannot give time off later instead of overtime pay; the FLSA allows that only for public agencies.
- Paid time off. Holiday, vacation and sick hours are not hours worked. A week with 8 holiday hours and 36 worked hours has no overtime under federal law, even though the check shows 44 hours.
- "Unauthorized" overtime. If the employer knew or should have known you were working, the hours must be paid at the overtime rate. The employer can discipline you for breaking a rule; it cannot withhold the pay.
- Averaging. A 50-hour week and a 30-hour week in the same pay period are 10 hours of overtime, not zero.
A worked example, taxes and where to complain
You earn $25 an hour and work 48 hours in the workweek. Straight time is 40 × $25 = $1,000, overtime is 8 × $37.50 = $300, total $1,300. Now add a $100 nondiscretionary attendance bonus for the week.
| Step | Math | Result |
|---|---|---|
| Total straight-time pay | 48 × $25 + $100 | $1,300.00 |
| Regular rate | $1,300 ÷ 48 | $27.08 |
| Overtime premium | 8 × ($27.08 ÷ 2) | $108.33 |
| Total for the week | $1,300 + $108.33 | $1,408.33 |
The bonus added $108.33, not $100, because it raised the regular rate the overtime was figured on. An employer that pays $1,400 here has underpaid by $8.33, which is small on one check and real over a year.
Overtime is taxed as ordinary wages: no special rate, and Social Security, Medicare and state tax come out as usual. A big overtime check can look over-withheld because payroll projects that one period to a full year, but it evens out on your return. For tax years 2025 through 2028, federal law also allows a deduction when you file for the premium portion of FLSA overtime (the extra half, not the whole time-and-a-half), up to $12,500 ($25,000 on a joint return), phasing out above $150,000 of modified adjusted gross income ($300,000 joint). It is claimed on the return, so it does not change the paycheck unless you adjust your W-4. The take-home pay calculator shows what a 48-hour week nets in your state. Treat all of this as an estimate and ask a tax professional about your own return.
If you believe you are owed overtime, the U.S. Department of Labor's Wage and Hour Division takes complaints, investigates and can recover back pay; the federal claim window is generally two years, three for willful violations, and retaliation for filing is illegal. Keep your own record of hours, because the employer's timesheet is not the only evidence. PayForge runs the overtime and take-home math for your state on your phone, so you can check a stub before you cash it.
Step by step
- Find your employer's workweekA fixed 7-day period. Overtime is figured within it, never across two weeks.
- Count hours actually workedLeave out holiday, vacation and sick hours; include all time the employer knew or should have known you were working.
- Figure the regular rateAll pay for the week (hourly pay, nondiscretionary bonuses, shift differentials, commissions) divided by hours worked.
- Pay straight time for every hourHours worked times the regular rate covers the straight-time share of every hour, overtime hours included.
- Add the half-time premiumOvertime hours times half the regular rate. The total should equal 1.5 times the regular rate for every hour over 40.
- Apply any state daily ruleIn California and a few other states, daily overtime can add more. Use whichever rule pays more.
Frequently asked questions
Is overtime required after 8 hours in a day?
Not under federal law; the FLSA counts hours over 40 in a workweek. California, Alaska, Nevada and Colorado have daily overtime rules with their own conditions, so check your state.
Do paid holidays count toward the 40 hours?
No. Only hours actually worked count under the FLSA. An employer policy or union contract can be more generous, but the law does not require it.
Can my employer give me comp time instead of overtime pay?
Private-sector employers cannot. The FLSA allows compensatory time in place of overtime pay only for state and local government employers, under specific rules.
Is overtime taxed at a higher rate?
No. Overtime is ordinary wages. A large check can be over-withheld because payroll annualizes each pay period, and it evens out on your return. For 2025 through 2028 a federal deduction for the overtime premium portion may also lower your tax when you file.
Written by TapForge Studios, a one-person Android studio run by a tradesman with a background in electrical, HVAC and life-safety work. Reviewed October 7, 2026. This guide is general information, not engineering, legal or tax advice; the adopted code edition, the manufacturer's instructions and the authority having jurisdiction govern.
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