How to Calculate Overtime Pay (With Examples)

Overtime is extra pay for extra hours. Many people are sure they are owed it, and many employers are not sure how to work it out. The math is not hard, but a few rules trip people up. This guide explains the federal rule from the US Department of Labor, shows the formula with examples and lists who does not get overtime.

The basic rule

The federal law is the Fair Labor Standards Act (FLSA). The Department of Labor's Fact Sheet #23 says that, unless specifically exempted, employees covered by the Act must receive overtime pay for hours worked in excess of 40 in a workweek at a rate not less than time and one-half their regular rates of pay.

Three details matter:

• The workweek is fixed. It is a set period of 168 hours, seven days in a row, and it can start on any day or time your employer chooses. Averaging hours over two or more weeks is not allowed.
• It cannot be waived. You and your employer cannot agree to give up overtime pay.
• Paid time off does not count. Under federal law, paid vacation or sick leave is not time worked, so it is not added to the 40 hours. Only hours actually worked count.

The formula

Overtime pay = overtime hours × regular rate × 1.5

Total pay for the week = regular rate × 40 + overtime pay.

Example 1: a simple hourly worker

Sam earns $20 an hour and works 46 hours in a week.

• Regular pay: 40 hours × $20 = $800.
• Overtime rate: $20 × 1.5 = $30.
• Overtime pay: 6 hours × $30 = $180.
• Total: $980 for the week.

If Sam worked those 46 hours every week for a year, the overtime alone would add $180 × 52 = $9,360 to a year of $41,600 in regular pay.

Example 2: when there is a bonus

Overtime is not based on the hourly wage alone. The "regular rate" includes most pay for the week, such as nondiscretionary bonuses and shift differentials. A bonus that is promised for meeting a goal is usually nondiscretionary, while a surprise bonus decided by the employer is not.

Maria earns $18 an hour, works 48 hours and gets a $60 production bonus for the week.

1. Straight-time pay for all 48 hours: 48 × $18 = $864.
2. Add the bonus: $864 + $60 = $924.
3. Regular rate for the week: $924 ÷ 48 = $19.25.
4. Overtime premium: the extra half-time for the 8 overtime hours: 8 × $19.25 × 0.5 = $77.00.
5. Total: $924 + $77 = $1,001.

If the bonus were left out of the regular rate, Maria's overtime premium would be 8 × $18 × 0.5 = $72, which is $5 less than the correct $77. A small gap each week adds up over a year.

Example 3: a salaried employee who is not exempt

A salary does not take away overtime rights. For a non-exempt salaried worker, the regular rate is the weekly salary divided by the hours the salary is meant to cover. The Department of Labor's example is a $405 weekly salary for a 45-hour week. The regular rate is $405 ÷ 45 = $9.00 an hour. The extra half-time for the 5 overtime hours is 5 × $4.50 = $22.50, so the worker is owed $427.50.

The department notes that a salary for a workweek longer than 40 hours does not satisfy the overtime requirement by itself.

Who does not get overtime?

Some employees are exempt from the federal overtime rule. The most common exemption is for executive, administrative and professional employees (often called white-collar exemptions). To qualify, an employee generally must meet all of these:

• Be paid on a salary basis,
• Earn at least $684 per week ($35,568 a year), and
• Perform duties that fit the exemption.

Job titles do not decide it, and neither does the salary alone. Highly compensated employees can be exempt with a lower duties test if total annual pay is at least $107,432. The Department of Labor says that after a 2024 rule raising these thresholds was set aside by a court on November 15, 2024, it applies the earlier level of $684 a week. Other exemptions exist for certain jobs, such as some outside sales roles and some agricultural, transportation and seasonal workers. Fact Sheet #17A explains the white-collar tests.

State rules can be better for you

Many states have their own overtime laws. Some states set a higher salary threshold for exemptions. A few, such as California, also require overtime after a set number of hours in a day, not only in the week. Where both federal and state law apply, the employee is entitled to overtime under the higher standard.

Do you get double time?

Federal law does not require double time. It sets time and a half. A union contract, an employment agreement or a state law may offer more, for example on holidays or after 12 hours in a day. Check your agreement.

How overtime is taxed

Overtime pay is wages. It is subject to federal income tax withholding, Social Security and Medicare tax, and state tax like the rest of your pay. A big overtime check can look like it is taxed more, because the payroll system may assume the larger amount continues all year. Your actual tax for the year is worked out on your total income when you file, and the extra overtime is taxed at your regular bracket rates.

The hourly to salary calculator includes an overtime line: enter your hourly rate, hours, weeks per year and an overtime multiplier, and it shows what a year of regular hours plus overtime would pay before tax.

What to do if your overtime looks wrong

1. Keep a record of your hours each day, with start and end times.
2. Compare your pay stub with the formula above for each week.
3. Ask your payroll or HR team to explain the regular rate they used.
4. If you still think you are owed more, contact the US Department of Labor's Wage and Hour Division or your state labor agency.

Frequently asked questions

How do I calculate time and a half?

Multiply your regular hourly rate by 1.5. If you earn $16 an hour, time and a half is $24 an hour for each overtime hour.

Is overtime paid after 8 hours a day?

Not under federal law, which looks at 40 hours in a workweek. Some states, such as California, have daily overtime rules.

Do salaried employees get overtime?

Some do. If a salaried employee is not exempt, because the pay is below the salary level or the duties do not fit an exemption, they are owed overtime for hours over 40.

Can my employer make me take time off instead of overtime pay?

Private employers generally cannot give "comp time" in place of overtime pay under the federal law. Public agencies have some special rules. Ask your state labor agency if you are unsure.

Does paid time off count toward the 40 hours?

No. Only hours actually worked count toward overtime under federal law, so paid vacation and sick leave hours are not added.

The bottom line

Overtime is 1.5 times your regular rate for hours over 40 in a workweek, and the regular rate includes most of what you earn that week. Count each week by itself, check whether you are exempt, and keep your own record of hours.

Sources

• Fact Sheet #23: Overtime Pay Requirements of the FLSA, U.S. Department of Labor, Wage and Hour Division
• Earnings thresholds for the executive, administrative and professional exemption, U.S. Department of Labor
• Fact Sheet #17A: Exemption for Executive, Administrative, Professional, Computer and Outside Sales Employees, U.S. Department of Labor
• Wages and the Fair Labor Standards Act, U.S. Department of Labor

Federal rules only, as published by the US Department of Labor. State law can be more generous, and facts about your job decide whether you are exempt. This is general information, not legal advice. Last reviewed October 12, 2026.