Overtime pay, commonly called OT, kicks in when you work more than 40 hours in a single workweek. Under federal law, your employer must pay you at least 1.5 times your regular hourly rate for every hour beyond that 40-hour mark. So if you normally earn $20 an hour, each overtime hour pays $30. This applies to most hourly workers in the United States, though the rules around who qualifies and how pay is calculated have some important details worth understanding.
The Basic Rule: Time and a Half After 40 Hours
The Fair Labor Standards Act (FLSA) is the federal law that governs overtime. It defines a workweek as any fixed, recurring 168-hour period (seven consecutive 24-hour days). Your employer gets to choose when the workweek starts and ends, but once it’s set, they can’t shift it around to avoid paying overtime. Hours from one workweek don’t carry over to the next. If you work 45 hours this week and 35 hours next week, you’re still owed five hours of overtime for this week, even though you averaged 40.
The 1.5x multiplier is a federal minimum. Some states go further, requiring daily overtime (typically after 8 hours in a single day) or double-time pay after a certain number of hours. Check your state’s labor department if you think a daily threshold might apply to you.
Who Gets Overtime Pay
Not every worker is entitled to overtime. The FLSA divides employees into two categories: non-exempt (eligible for overtime) and exempt (not eligible). Most hourly workers are non-exempt by default. Salaried workers can fall into either category depending on how much they earn and what kind of work they do.
To be classified as exempt, an employee must meet two tests. First, they must earn at least $684 per week on a salary basis, which works out to $35,568 per year. Second, their job duties must fit one of several specific categories:
- Executive: The employee’s main job is managing the business or a recognized department, they regularly direct the work of at least two full-time employees, and they have real authority over hiring and firing decisions.
- Administrative: The employee performs office or non-manual work related to business operations and regularly exercises independent judgment on significant matters.
- Learned professional: The work requires advanced knowledge in a field of science or learning, typically gained through an extended course of specialized education. Think doctors, lawyers, engineers, or accountants.
- Creative professional: The work requires invention, imagination, or talent in a recognized artistic or creative field.
- Computer professional: Employees working as systems analysts, programmers, or software engineers may qualify if their duties meet specific technical criteria.
- Outside sales: Employees whose primary duty is making sales or obtaining orders away from the employer’s place of business.
Both the salary test and the duties test must be met. A manager earning $600 a week isn’t exempt, even if the job duties fit the executive category, because the salary falls below the $684 threshold. Likewise, an administrative assistant earning $900 a week isn’t exempt just because of the salary if the job doesn’t involve independent judgment on significant business matters. Job titles alone don’t determine your status.
Highly compensated employees who earn at least $107,432 in total annual compensation face a simpler duties test, but they still must perform at least one exempt duty to lose overtime eligibility.
How Your Overtime Rate Is Calculated
Your overtime rate is based on your “regular rate of pay,” which isn’t always the same as your base hourly wage. The regular rate includes all remuneration for employment, meaning your employer has to factor in certain types of extra pay when calculating overtime.
If you earn shift differentials, non-discretionary bonuses (bonuses tied to productivity, attendance, or hitting targets), or commissions, those amounts get rolled into your regular rate before the 1.5x multiplier is applied. Here’s how the math works: add up all qualifying compensation for the workweek, divide by the total hours you worked, and that gives you your regular rate. Multiply that by 1.5, and you have your overtime rate.
For example, say you earn $20 an hour and work 44 hours. You also received a $100 non-discretionary bonus that week. Your total straight-time compensation is (44 × $20) + $100 = $980. Your regular rate is $980 ÷ 44 = $22.27. Your overtime premium is half that regular rate ($11.14) for each of the 4 overtime hours, adding $44.55 to your paycheck on top of the $980.
What Doesn’t Count Toward the Regular Rate
Several types of payments are excluded from the overtime calculation. Holiday or birthday gifts that aren’t tied to hours worked or productivity don’t count. Paid time off, including vacation pay, sick pay, and holiday pay, is excluded because those payments cover hours when you weren’t actually working. Expense reimbursements, employer contributions to retirement plans or health insurance, and discretionary bonuses (where the employer decides whether and how much to pay, with no prior promise) are also excluded.
When Overtime Isn’t What You’d Expect
A few scenarios catch people off guard. If your employer pays you a salary but you’re non-exempt, you’re still entitled to overtime. Being salaried doesn’t automatically mean you’re exempt. Your employer needs to convert your salary into an effective hourly rate and pay 1.5x that rate for hours beyond 40.
Working two different jobs for the same employer at different pay rates is another wrinkle. Your overtime rate is based on the blended regular rate across both roles for that workweek, not just the rate for whichever job you happened to be doing when you crossed the 40-hour line.
Employers also can’t avoid overtime by averaging hours across two weeks. Even if you’re paid biweekly, overtime is calculated on each individual workweek. And “comp time” (getting extra time off instead of overtime pay) is generally not allowed in the private sector under federal law, though some government employers can offer it.
What to Do If You’re Not Getting Paid
If you believe you’re owed overtime, start by documenting your hours independently. Keep your own records of when you clock in and out, including any work done off the clock like answering emails or finishing tasks at home. Your employer is legally required to keep accurate time records for non-exempt employees.
You can file a complaint with the U.S. Department of Labor’s Wage and Hour Division, which investigates overtime violations at no cost to you. The FLSA allows recovery of up to two years of unpaid overtime (three years if the violation was willful), plus an equal amount in liquidated damages. Your state’s labor agency may offer additional protections or longer recovery windows.