How to Calculate Overtime Pay, With Worked Examples for Bonuses, Two Pay Rates and Salaried Workers

Time and a half sounds simple until a bonus, a second pay rate or a salary enters the picture. Here is how to check the math yourself.

How is overtime pay calculated?

Under federal law, most hourly workers earn overtime for hours over 40 in a workweek, at 1.5 times their regular rate of pay. To calculate it, divide the week's total pay by hours worked, take half of that rate, and multiply by overtime hours. Then add that premium to your straight-time pay.

The catch is the phrase "regular rate." It isn't always your hourly wage. If you earned a shift differential or a promised bonus that week, your regular rate can be higher than the number on your offer letter, and your overtime should be too.

This guide is for anyone who wants to check a paycheck: hourly workers, people paid two different rates, and salaried workers who are still owed overtime. It explains federal rules from the U.S. Department of Labor. Your state may give you more. If you'd like a refresher on where these numbers appear, start with our guide to reading a pay stub.

The rules that decide what you're owed

The federal law is the Fair Labor Standards Act, or FLSA. The Labor Department's overtime fact sheet sets out a few basics that clear up most confusion.

Your workweek is a fixed, repeating block of 168 hours, or seven 24-hour days in a row. It doesn't have to match the calendar week, and it can start on any day and at any hour. Your employer sets it, and it should stay the same from week to week.

Each workweek stands alone. Averaging hours over two or more weeks isn't allowed, even if you're paid every two weeks.

Federal overtime is about weekly hours, not daily ones. A 12-hour day doesn't trigger federal overtime if the week stays at 40 hours or fewer. Weekends and holidays don't count on their own either, and the Labor Department's FAQ notes that the FLSA has no double-time requirement.

Overtime can't be signed away. The fact sheet says the requirement can't be waived by agreement, and a company policy that overtime isn't paid unless approved in advance doesn't cancel your right to pay for overtime you actually worked.

The three-step formula

The Labor Department's bonus fact sheet lays out the method. It works in almost every situation.

1. Find your regular rate. Add up all pay for the week, leaving out items the law excludes, and divide by total hours worked.
2. Find the half-time premium. Multiply the regular rate by 0.5.
3. Find the overtime due. Multiply the premium by your overtime hours, then add it to your total pay for the week.

The regular-rate fact sheet explains what stays out. Common exclusions include paid vacation, holiday and sick leave, reimbursed work expenses, true gifts and discretionary bonuses. Almost everything else goes in, including shift differentials and bonuses you were promised.

Five worked examples

These use made-up wages. Swap in your own numbers and the steps stay the same. Totals are rounded to the cent at each step, which is how the Labor Department's examples do it.

Example 1: A simple hourly week. You earn $20 an hour and work 46 hours.

• Straight pay: 46 × $20 = $920
• Half-time premium: $20 × 0.5 = $10
• Overtime premium: 6 × $10 = $60
• Total: $980

The shortcut gives the same answer: 40 × $20 = $800, plus 6 × $30 = $180, which also equals $980. The shortcut only works when your hourly wage is your entire pay.

Example 2: The two-week paycheck. You earn $18 an hour, are paid every two weeks, and work 30 hours one week and 50 the next. That's 80 hours, which looks like two normal weeks. It isn't.

• Week 1: 30 × $18 = $540, with no overtime
• Week 2: 50 × $18 = $900, plus 10 × $9 = $90, for $990
• Total: $1,530

If a paycheck showed 80 hours at $18, or $1,440, you'd be $90 short.

Example 3: Two pay rates in one week. You work 30 hours at $22 and 15 hours at $16 for the same employer. Under the weighted-average rule, your regular rate blends the two.

• Total straight pay: $660 + $240 = $900
• Regular rate: $900 ÷ 45 = $20
• Premium: 5 × $10 = $50
• Total: $950

The regulations do allow another method in some cases, paying 1.5 times the rate in effect when the overtime happens, so ask which one your employer uses.

Example 4: A promised bonus. You earn $18 an hour, work 44 hours, and earn a $60 attendance bonus. Attendance bonuses are nondiscretionary, which means they must be included.

• Straight pay plus bonus: $792 + $60 = $852
• Regular rate: $852 ÷ 44 = $19.36
• Premium: $19.36 × 0.5 = $9.68
• Overtime: 4 × $9.68 = $38.72
• Total: $890.72

If payroll ignored the bonus when figuring overtime, you'd get $792 + $36 + $60 = $888, or $2.72 less. That's small in one week and bigger over a year.

Some bonuses cover several weeks. Say you get a $550 quarterly bonus after 550 hours, 30 of them overtime. If the bonus can't be tied to specific weeks, the regulations allow treating it as equal for each hour. That's $1 an hour, so you'd be owed another 30 × $0.50 = $15. A bonus paid as a percentage of total earnings, overtime included, generally needs no extra calculation.

Example 5: Salaried but not exempt. Being on salary doesn't end overtime by itself. The math depends on how many hours your salary is meant to cover. Say you earn $900 a week and work 45 hours.

• If $900 covers 40 hours: the regular rate is $22.50, overtime is 5 × $33.75 = $168.75, and the total is $1,068.75.
• If $900 covers a 45-hour week: the regular rate is $20, the premium is 5 × $10 = $50, and the total is $950.

That's a $118.75 weekly difference, which is why it's worth knowing exactly what your salary covers.

Which hours count as work

Overtime starts with hours worked, and those can go beyond your scheduled shift. The hours-worked fact sheet says work your employer allows you to do counts, even if nobody asked for it, such as finishing a task or fixing errors after your shift.

Short rest breaks, usually 20 minutes or less, count as paid time. Meal periods, typically 30 minutes or more, generally don't count if you're completely relieved of duty. If you have to answer the phone or keep working while you eat, that time counts.

Training usually counts unless it's outside normal hours, voluntary, not job related and no other work happens during it. An ordinary commute doesn't count, but travel between job sites during the day does. On-call time at your workplace counts, while on-call time at home usually doesn't, though tight restrictions can change that.

Who doesn't get overtime

Some employees are exempt, which means the overtime rules don't apply to them. The exemption fact sheet covers the main white-collar groups: executive, administrative, professional, computer and outside sales.

For most of those groups, you must generally meet a salary test and a job duties test. Job titles don't decide it. A "manager" whose work doesn't meet the duties test may still be owed overtime. The fact sheet also says the exemptions don't cover blue-collar manual workers, or police, firefighters and other first responders.

The minimum salary level can change, so check the current figure on the Labor Department's salary-levels page. These rules apply to employees, so it also matters whether you're truly an employee or an independent contractor. If overtime matters to you, it's worth asking about exempt status when you negotiate a job offer.

State rules and taxes

Where state and federal overtime rules both apply, the higher standard governs, the Labor Department says. California is a well-known example: it requires time and a half after 8 hours in a workday, and double time after 12. Check your state labor agency, since rules vary and can change.

Taxes are a separate question. The IRS has published guidance on a federal deduction for qualified overtime pay. Only the half-time premium the FLSA requires counts, which would be the $60 in Example 1, not the full $180. Overtime required only by state law or a union contract doesn't qualify. Tax rules can expire or change, so check the current version on irs.gov.

Common mistakes to look for

Most paycheck problems fall into a few patterns:

• Hours averaged across a two-week pay period, as in Example 2.
• Overtime based on the base wage when a shift differential or promised bonus should have raised it.
• Time shaved off for a break you didn't really get.
• Work before or after your shift left off your timecard.
• A flat payment for extra hours in place of real overtime. The fact sheet gives an example of a flat sum that doesn't qualify as an overtime premium.

What to do if your overtime looks short

Start with your own records. Save your pay stubs, and write down your start and end times, meal breaks and pay dates. The Labor Department says a personal log helps if you don't have employer records. Next, some people ask payroll in writing to walk through the calculation, since many errors are simple setup mistakes.

If that doesn't resolve it, one option is the Wage and Hour Division at 1-866-487-9243. Filing a complaint is free and confidential, and your employer can't legally retaliate against you for it.

Don't wait too long, though. The Labor Department says the law sets a two-year limit, or three years for willful violations. You may also have the right to file a private lawsuit for back wages, an equal amount in damages, and attorney's fees and court costs. An employment lawyer or your state labor agency can explain which route fits your situation.