how to calculate overtime pay

Double time is another method of calculating overtime pay, but it is less common than time and a half. While the FLSA does not require double-time pay, some union contracts do. Using this method, employees receive double their regular hourly rate for every hour worked over a certain number of hours in a workday or workweek (usually 40 hours). One of the biggest wage-and-hour pitfalls among employers is assuming that all salaried employees are exempt from overtime pay.

  • The FLSA does not require employers to pay overtime rates for hours worked during holidays, weekends or nights.
  • Some states calculate overtime based on the number of hours worked in a day, while others use the number of hours in any given week.
  • It’s important to check your state’s regulations before paying out overtime compensation.
  • Within the United States, the different states may have their own legislation regarding OT.
  • In this case, the employee will receive their regular weekly rate of $961.54 plus $180.30 in overtime to total $1,141.84.

In some states, employers may also owe employees double overtime in some cases. Double overtime may be owed if employees work more than 12 hours a day. However, laws can vary by state or by the agreement signed when accepting employment, so double overtime may not always apply. In the simplest terms, overtime refers to hours worked beyond a traditional 40-hour week. This is dictated by law by the Federal Labor Standards Act (FLSA), but the exact requirements of who can earn overtime pay and how much can vary from state to state. The Fair Labor Standards Act (FLSA) provides guidance to help you determine which employees on your team are entitled to overtime pay, and which ones aren’t.

How do I calculate overtime from a basic salary?

Shift differential pay is not required by the federal government, unlike overtime pay, which is regulated by the FLSA, union contracts and state laws. To calculate overtime pay, multiply the overtime rate (1.5 for time and a half, or two for double time) by the number of overtime hours worked. The specific number of hours that trigger double time varies by state and employer. Even when not required by law or contract, double-time pay for overtime hours worked or holidays can be offered as an added benefit. However, by state law, employers in California must pay double time for over 12 consecutive hours of work and Washington state requires double time pay for certain public works projects. An employee’s workweek is a fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods.

All you have to do is provide some information about your hourly wages, and it will calculate the total pay you will receive this month. As noted above, salaried employees may also be classified as non-exempt and be eligible for overtime. Here are answers to some frequently asked questions about the proposed rule. In addition, the total annual how to calculate overtime pay compensation level for “highly compensated employees (HCEs)” has been increased from the current level of $100,000 to $107,432 a year. As an employer in the United States, it’s important to understand the criteria for overtime pay eligibility. The FLSA establishes the rules for overtime pay, which apply to most workers in the country.


Regardless of whether an employee is paid on a salaried, piece-rate or hourly basis, the regular rate must be calculated in hourly increments to calculate overtime. Overtime pay for salaried employees can seem tricky to calculate, but it’s actually fairly simple. One way to do it is to divide their weekly pay by the number of hours they work in a week. For instance, let’s say they make $800 a week and work 40 hours per week.

A regular task that employers must perform is calculating overtime pay for their employees. And depending on your state, industry, and how you run your business, you may occasionally have to calculate overtime pay for hourly and salaried employees. Once you have determined your employee’s regular pay rate, multiply it by one and a half (1.5) to find their overtime pay rate.

Common overtime mistakes employers make

Employers should provide at least one and a half times an employee’s regular pay for overtime hours according to FLSA regulations. Add your employee’s regular pay and overtime pay together to find their total pay for the week. For instance, if the employee earned $800 in regular pay and $180 in overtime pay, their total weekly paycheck would amount to $980 ($800 + $180). In today’s fast-paced work environment, it is not uncommon for employees to put in extra hours to meet deadlines and accomplish their tasks. When employees work more than their standard hours, they are often entitled to overtime pay. This article provides a step-by-step guide on how to calculate the overtime rate for hourly employees.

how to calculate overtime pay

Federal overtime laws require employers to pay non-exempt employees who work more than 40 hours in a week at least time and a half for the extra time they put in. For more information on overtime pay, visit the DOL website, contact the state labor department, or consult with a wage-and-hour expert. Moreover, you can utilize the DOL’s FLSA Overtime Calculator Advisor, which is designed to help employers calculate overtime pay correctly, according to FLSA standards. To qualify for overtime, the employee cannot be exempt from the FLSA’s overtime pay provisions. Generally speaking, most hourly employees are nonexempt and most salaried employees are exempt. It’s important to note that regulations and the way overtime is calculated can vary from state to state.

Overtime laws are a complex issue that often causes headaches for accountants and business owners all over the world. Calculating overtime pay may become a complicated mathematical equation. These bonuses are nondiscretionary because employees know about and expect the bonus. The understanding of how an employee earns the bonus may lead them to expect to receive the bonus regularly. The fact that the employer has the option not to pay the bonus doesn’t make the bonus discretionary.

how to calculate overtime pay