Overtime pay seems like simple multiplication, until a salaried employee works 45 hours, or a worker earns two different hourly rates, or a production bonus lands in the same week. The federal formula is always the same, but the inputs change. This guide breaks the calculation into three steps, then shows how to handle the cases that trip people up.
For the rules behind who qualifies for overtime, see our companion guide on overtime pay rules every small business owner must know. This article is about the math.
The Overtime Formula in Plain English
Under the federal Fair Labor Standards Act (FLSA), non-exempt employees must be paid 1.5 times their regular rate for every hour worked over 40 in a workweek. The whole calculation is:
Total gross pay = (Regular rate × 40) + Overtime pay
Everything hard about overtime comes down to one question: what is the regular rate? Get that right and the rest is arithmetic.
Step 1: Find the Regular Rate of Pay
For a straightforward hourly employee, the regular rate is simply their hourly wage. A worker paid $20/hour has a regular rate of $20.
But the regular rate is technically defined as total straight-time compensation ÷ total hours worked. That definition matters when the worker earns commissions, shift differentials, or nondiscretionary bonuses, all of which must be folded in (covered below).
Step 2: Multiply by 1.5
The overtime rate, "time and a half", is the regular rate × 1.5:
| Regular rate | Overtime rate (×1.5) |
|---|---|
| $15.00 | $22.50 |
| $20.00 | $30.00 |
| $25.00 | $37.50 |
| $30.00 | $45.00 |
Step 3: Calculate Total Gross Pay
Example: An employee paid $20/hour works 48 hours in a workweek.
- Regular pay: 40 hours × $20 = $800.00
- Overtime hours: 48 − 40 = 8 hours
- Overtime rate: $20 × 1.5 = $30.00
- Overtime pay: 8 × $30 = $240.00
- Total gross pay: $800 + $240 = $1,040.00
Overtime for Salaried (Non-Exempt) Employees
Being paid a salary does not automatically remove the right to overtime. A non-exempt salaried worker is still owed time and a half above 40 hours, you just have to back out their hourly rate first.
Example: A non-exempt employee earns a $52,000 salary for a 40-hour week and works 45 hours.
- Weekly salary: $52,000 ÷ 52 = $1,000
- Regular rate: $1,000 ÷ 40 = $25.00/hour
- Overtime rate: $25 × 1.5 = $37.50
- Overtime pay: 5 hours × $37.50 = $187.50
- Total for the week: $1,000 + $187.50 = $1,187.50
Multiple Pay Rates & the Weighted Average
When an employee works two jobs at different rates in the same week, the overtime rate is based on the weighted average of all rates, not just the rate they happened to be earning during the overtime hours.
Example: A worker logs 30 hours at $18/hour (front desk) and 20 hours at $22/hour (events), 50 hours total.
- Straight-time earnings: (30 × $18) + (20 × $22) = $540 + $440 = $980
- Regular rate (weighted average): $980 ÷ 50 hours = $19.60
- Overtime premium: the extra 0.5 × $19.60 = $9.80 per OT hour
- Overtime hours: 50 − 40 = 10
- Overtime premium pay: 10 × $9.80 = $98.00
- Total gross pay: $980 + $98 = $1,078.00
Because straight-time for all 50 hours is already counted in step 1, you only add the half-time premium (0.5×) on the overtime hours here, a common point of confusion.
When Bonuses Change the Math
Nondiscretionary bonuses, those promised in advance for hitting production, attendance, or safety targets, must be added into the regular rate, which raises overtime pay.
Example: An employee earns $20/hour, works 45 hours, and receives a $100 production bonus for the week.
- Straight-time pay: 45 × $20 = $900, plus $100 bonus = $1,000 total compensation
- Regular rate: $1,000 ÷ 45 hours = $22.22
- Overtime premium: 0.5 × $22.22 = $11.11 per OT hour
- Overtime hours: 5 × $11.11 = $55.55
- Total gross pay: $1,000 + $55.55 = $1,055.55
Daily Overtime & State Rules
Federal law only requires weekly overtime. But several states layer on stricter rules:
| State | Daily overtime trigger | Double time |
|---|---|---|
| California | Over 8 hours/day | Over 12 hours/day |
| Alaska | Over 8 hours/day | — |
| Nevada* | Over 8 hours/day | — |
| Colorado | Over 12 hours/day | — |
*Nevada daily overtime applies to employees under a certain wage threshold. Always verify current state rules.
When state and federal law differ, you owe whichever calculation produces the higher pay. In California, a 10-hour single day earns 2 hours of daily overtime even if the weekly total stays under 40.
Enter the rate and hours and let the calculator handle time-and-a-half and the 40-hour threshold for you.
Frequently Asked Questions
How do you calculate overtime pay?
Find the regular rate, multiply by 1.5 for the overtime rate, then multiply by the hours worked over 40 in the workweek. Add that to pay for the first 40 hours to get total gross pay.
What is time and a half for $20 an hour?
Time and a half for $20 an hour is $30 an hour ($20 × 1.5). An employee working 8 overtime hours at that rate earns an extra $240.
Is overtime calculated daily or weekly?
Federally, overtime is weekly, hours over 40 in a workweek. Some states (California, Alaska, others) also require daily overtime after 8 hours. The rule more favorable to the employee applies.
Do bonuses count toward overtime pay?
Nondiscretionary bonuses (production, attendance, safety) must be included in the regular rate, raising overtime pay. Discretionary bonuses and gifts are excluded.