How to Calculate Overtime Pay: The Complete Guide (2024)
Calculating overtime pay correctly matters — for workers who want to know they're being paid right, and for employers who need to stay compliant with federal and state law. This guide breaks down the exact formulas, with real examples for hourly workers, salaried employees, and special cases like California's daily overtime.
The basic overtime formula
Under the federal Fair Labor Standards Act (FLSA), the standard overtime calculation is:
Overtime Pay = (Hours over 40) × (Regular Hourly Rate × 1.5)
This means for every hour worked beyond 40 in a single workweek, the employee earns 1.5 times their regular rate — also called "time and a half."
Step 1: Determine the regular hourly rate
Your regular rate is the basis for all overtime calculations. How you determine it depends on your pay structure:
- Hourly employees: Use your stated hourly wage (e.g., $20/hr).
- Salaried (non-exempt) employees: Divide your weekly salary by your standard hours (typically 40). Example: $1,000/week ÷ 40 = $25/hr regular rate.
- Piece-rate workers: Total weekly earnings ÷ total hours worked = regular rate.
- Workers with multiple rates: Use a weighted average of all rates.
Step 2: Calculate the overtime rate
Multiply the regular rate by the overtime multiplier:
- Time and a half (1.5×): Standard FLSA rate. $20/hr × 1.5 = $30/hr OT rate
- Double time (2×): Required only in some states. $20/hr × 2 = $40/hr DT rate
Step 3: Identify overtime hours
For most workers under federal FLSA, overtime is any hour worked over 40 in a single workweek (defined as a fixed 168-hour period — seven consecutive 24-hour periods).
Some states have additional daily overtime thresholds:
- California: Daily OT after 8 hrs, double time after 12 hrs
- Alaska: Daily OT after 8 hrs (or 40 hrs/week, whichever benefits worker more)
- Nevada: Daily OT after 8 hrs for lower-wage workers
- Colorado: Daily OT after 12 hrs
- Oregon: Daily OT after 10 hrs for manufacturing workers
Step 4: Multiply OT hours by OT rate
Once you know your OT hours and OT rate, the math is simple multiplication.
Scenario: Sarah earns $22/hr and worked 47 hours in one week.
- Regular hours: 40 × $22 = $880
- OT hours: 7 hrs × ($22 × 1.5) = 7 × $33 = $231
- Gross weekly pay: $880 + $231 = $1,111
Scenario: Mike earns $1,200/week salary and worked 50 hours.
- Regular rate: $1,200 ÷ 40 = $30/hr
- OT rate: $30 × 1.5 = $45/hr
- Regular pay: $1,200 (his salary already covers 40 hours)
- OT pay: 10 hrs × $45 = $450
- Gross weekly pay: $1,200 + $450 = $1,650
How to calculate California overtime (special rules)
California has the most complex overtime law in the US. The state requires:
- Time and a half (1.5×) after 8 hours in a single workday OR after 40 hours in a workweek
- Double time (2×) after 12 hours in a single workday
- 7th consecutive day rule: 1.5× for the first 8 hours worked, 2× for any hours beyond 8
Scenario: A California worker earns $25/hr and works 14 hours on Tuesday.
- First 8 hrs: 8 × $25 = $200 (regular)
- Hours 9–12 (4 hrs OT): 4 × $37.50 = $150 (1.5×)
- Hours 13–14 (2 hrs DT): 2 × $50 = $100 (2×)
- Total for that day: $450
Common overtime calculation mistakes
- Excluding non-discretionary bonuses. Performance bonuses, shift differentials, and commissions must be included in the regular rate calculation.
- Averaging hours across two weeks. Each workweek stands alone — you can't combine 30 hrs one week + 50 hrs the next to avoid OT.
- Misclassifying employees as exempt. Just calling someone a "manager" doesn't make them exempt — they must meet specific salary AND duties tests.
- Forgetting state daily overtime. California, Alaska, Nevada, Colorado, and Oregon have rules that may give workers more pay.
- Not paying for off-the-clock work. Pre-shift setup, post-shift cleanup, and mandatory training count as work time.