What Is Overtime Pay? How It Works in the US

Overtime pay rewards you for working beyond a standard schedule. In the United States, it's governed mainly by the Fair Labor Standards Act (FLSA), a federal law that sets minimum wage and overtime rules for most private and public employers. Here's how overtime works, who qualifies, and how to calculate it.

The 1.5x rule

Under the FLSA, covered, non-exempt employees must receive overtime pay of at least 1.5 times their regular rate of pay for every hour worked over 40 in a workweek. This is commonly called "time and a half."

A workweek is any fixed, recurring period of 168 hours — seven consecutive 24-hour days. Your employer sets when it starts. Hours can't be averaged across two weeks: working 30 hours one week and 50 the next still means 10 hours of overtime in the second week.

Who qualifies for overtime?

Non-exempt employees

Most hourly workers are non-exempt, meaning they're entitled to overtime. Being paid a salary doesn't automatically make you exempt.

Exempt employees

To be exempt, an employee generally must be paid on a salary basis, earn at least the federal salary threshold, and perform specific executive, administrative or professional duties. Certain jobs, like outside sales, have their own rules. If you're unsure of your status, check with your HR department or the U.S. Department of Labor.

State overtime laws

States can offer more protection than federal law. California, for example, requires overtime for hours over eight in a single workday and double time in some cases. When state and federal law differ, the rule that's better for the worker applies.

How to calculate overtime pay

1. Find your regular hourly rate.
2. Multiply it by 1.5 to get your overtime rate.
3. Multiply your overtime rate by the number of hours over 40.
4. Add that to your regular pay for the first 40 hours.

Worked example

Maria earns $22 an hour and works 46 hours this week.

• Regular pay: $22 × 40 = $880
• Overtime rate: $22 × 1.5 = $33
• Overtime pay: $33 × 6 = $198
• Total weekly gross pay: $1,078

If Maria averages six overtime hours every week for a year, her overtime alone adds $198 × 52 = $10,296 to her annual gross pay. You can model this in the Hourly to Salary Calculator by turning on the overtime option.

Things that affect your regular rate

Your "regular rate" for overtime purposes can include more than your base wage. Non-discretionary bonuses, shift differentials and certain commissions usually must be included, which can raise your overtime rate. Discretionary gifts and expense reimbursements generally are not included.

Overtime and your paycheck

Overtime increases your gross pay, and taxes are withheld from it just like regular wages. Bigger checks can also mean bigger withholding, so the extra take-home amount may be smaller than you expect. See gross pay vs. net pay for how deductions work, and how to convert hourly wage to salary to see overtime's effect on your yearly earnings.