How to Calculate Overtime Pay: Formula and Examples
Overtime is 1.5x the FLSA regular rate, not 1.5x your base wage. Here is the formula, worked blended-rate and bonus examples, and the traps that cause back pay.
This article is for general information, not tax or legal advice. Federal wage rules and tax figures change. Verify current numbers with the Department of Labor and the IRS, or talk to a payroll professional, before you rely on them.
The formula is short: overtime pay = regular rate x 1.5 x hours over 40 in the workweek.
That covers most paychecks. The part that trips people up is the phrase “regular rate,” because it is not the number on your offer letter. Under the FLSA, the regular rate is your total pay for the workweek divided by the hours you actually worked. A production bonus, a commission, or a night-shift premium pushes it above your base wage, which means it pushes your overtime rate above 1.5 times your base wage too.
What follows is the plain case, the three situations that break it, and the mistakes that turn into back pay.
The overtime formula, and the number most people get wrong
Federal overtime comes from 29 U.S.C. 207(a)(1). Nonexempt employees get at least 1.5 times their regular rate for every hour over 40 in a workweek. There is no federal daily trigger and no federal double-time rule.
A workweek is any fixed, recurring period of 168 hours (29 CFR 778.105). The employer picks it. It does not have to run Monday through Sunday, and it does not have to line up with the pay period. Remember that second part, because it causes a specific and expensive error later in this article.
The regular rate is defined in 29 CFR 778.109: total remuneration for the workweek, minus the statutory exclusions, divided by the total number of hours actually worked. Hours you were paid for but did not work, like holiday pay or PTO, stay out of the denominator.
Example A: the base case
$22 an hour, 46 hours worked, nothing else in the paycheck.
- Regular rate: $22.00
- Overtime rate: $22.00 x 1.5 = $33.00
- Straight time: 40 x $22 = $880
- Overtime: 6 x $33 = $198
- Gross for the week: $1,078
There is a second way to write that same answer. Learn it, because every example after this one uses it:
- Straight time for all hours worked: 46 x $22 = $1,012
- Half-rate premium on the overtime hours: 6 x $11 = $66
- Gross for the week: $1,078
Identical result. Payroll uses the second form because once the regular rate is a blended number, “half premium on top of straight time” is the only version that stays correct. If you need to turn clock-in and clock-out times into total hours before any of this, the timesheet hours calculator handles that step.
When a bonus raises your overtime rate
Nondiscretionary bonuses go into the regular rate. So do production and attendance and safety incentives, commissions, and shift differentials. Section 7(e) of the FLSA lists eight things that come out, including true discretionary bonuses, gifts, PTO and holiday pay, expense reimbursements, and benefit-plan contributions. Everything else counts as total remuneration.
The discretionary test is stricter than most employers assume. To be discretionary, the employer has to keep control over two things until at or near the end of the period: whether there is a bonus at all, and how big it is. No prior promise, either. A bonus you announced in advance with a formula attached is nondiscretionary by definition (29 CFR 778.208), no matter what you call it in the handbook.
Example B: $20 an hour, 48 hours, $120 weekly production bonus
- Straight time for all hours: 48 x $20 = $960
- Add the bonus: $960 + $120 = $1,080
- Regular rate: $1,080 / 48 = $22.50 (not $20)
- Overtime premium: 0.5 x $22.50 x 8 = $90
- Gross for the week: $1,170
Now run the naive version. Pay 40 hours at $20 ($800), 8 hours at $30 ($240), add the bonus on top ($120), and you get $1,160.
Ten dollars short. Every week. That is roughly $520 a year for one employee. Put twenty people on the same incentive plan and you are carrying a five-figure liability you never budgeted for. The effective overtime rate here is $33.75 an hour, not $30.
Quarterly and annual bonuses work the same way, just retroactively. You allocate the bonus back across the workweeks in which it was earned and recompute the overtime premium for each of those weeks (29 CFR 778.209). If the earnings genuinely cannot be tied to specific weeks, an equal-per-week or equal-per-hour allocation is allowed.
Two rates in one week: the weighted average
If someone works at two different straight-time rates in a single workweek, the regular rate is the weighted average of those rates (29 CFR 778.115). It is not the rate that happened to be in effect when hour 41 rolled around.
Most guides illustrate this with a two-job example, like a cook who also drives deliveries. The far more common version is a shift differential: same job, higher rate for nights or weekends. The math is identical.
Example C: 30 hours at $18 (day) plus 18 hours at $21 (night)
- Day straight time: 30 x $18 = $540
- Night straight time: 18 x $21 = $378
- Total straight time: $918 over 48 hours
- Regular rate: $918 / 48 = $19.125
- Overtime premium: 0.5 x $19.125 x 8 = $76.50
- Gross for the week: $994.50
Look at that regular rate: three decimal places. Real blended rates land on numbers like $19.125 and $22.4167 constantly, and every textbook example you find online is quietly engineered to divide evenly so the author never has to address it.
Do not round the regular rate before you multiply. Rounding $19.125 to $19.13 gives $76.52 instead of $76.50. Two cents. Two cents per employee per week across a forty-person crew, though, is a reconciliation mismatch every quarter. That is why WorkLogs44 runs its payroll math through a decimal library instead of floating-point arithmetic. Carry the full precision through the calculation and round once, at the end, on the paycheck total.
There is one exception. Under section 7(g)(2), an employer can pay 1.5 times the rate in effect during the overtime hours instead of the weighted average, but only with a prior agreement or understanding with the employee. No agreement, no shortcut. Weighted average is mandatory.
Salaried does not mean exempt
Paying someone a salary does not exempt them from overtime. Exemption takes two things, the salary basis and a duties test, and plenty of salaried coordinators, assistants, and shift leads fail the duties half.
As of July 2026, the federal salary floor is $684 a week ($35,568 a year), the level set in 2019. The DOL’s 2024 rule that would have raised it to $844 and then $1,128 was vacated nationwide by the Eastern District of Texas in November 2024, which also reverted the highly compensated employee threshold to $107,432. The DOL made that reversion official in a technical amendment published in May 2026, so $684 and $107,432 are the operative numbers today. Check your state too, because several set higher floors.
Example D: salaried nonexempt, $52,000 a year
The salary is meant to cover a 40-hour week. That works out to $1,000 a week.
- Regular rate: $1,000 / 40 = $25.00
- Overtime rate: $25.00 x 1.5 = $37.50
- Employee works 45 hours: 5 x $37.50 = $187.50
- Gross for the week: $1,187.50
That is the standard method in 29 CFR 778.113. There is an alternative, the fluctuating workweek (29 CFR 778.114), where a fixed salary covers whatever hours the week brings and overtime is paid at only the 0.5x premium, because straight time for all hours is already inside the salary. It requires genuinely fluctuating hours and a clear mutual understanding. An employer cannot switch to it unilaterally to shrink an overtime bill.
Three traps that turn into back pay
The DOL recovered $259 million in back wages for about 177,000 workers in fiscal year 2025, its highest total since 2019. Most of those cases are not exotic. They are these three.
1. Averaging hours across weeks. Each workweek stands alone (29 CFR 778.104). Hours may never be averaged over two or more weeks to dodge the 40-hour trigger.
Say a biweekly pay period contains a 32-hour week and a 48-hour week. Payroll sees 80 hours on the timesheet, pays 80 hours straight, and moves on. Wrong. Week two owes 8 overtime hours. At a $20 regular rate that is 8 x $10 = $80 of unpaid premium, every pay period. Biweekly and semimonthly employers hit this constantly because the pay period boundary is not the workweek boundary.
2. Unauthorized overtime is still payable. “Work not requested but suffered or permitted is work time,” says 29 CFR 785.11, and “the reason is immaterial.” You can discipline an employee for violating an overtime policy. You still have to pay them for the hours.
This includes off-the-clock setup before a shift, work performed through an auto-deducted lunch break, and after-hours email, once the employer knows or has reason to know it is happening.
3. State rules that beat the federal one. The 40-hour weekly trigger is a floor. Daily-overtime states change the answer.
| State | Daily overtime rule |
|---|---|
| California | 1.5x over 8 hours a day; 2x over 12 hours a day; 1.5x for the first 8 hours of the 7th consecutive workday, 2x beyond that |
| Alaska | 1.5x over 8 hours a day or 40 in a week |
| Colorado | 1.5x over 12 hours a day, or 12 consecutive hours, plus the weekly 40 trigger |
| Nevada | 1.5x over 8 hours a day, but only for employees earning under 1.5x the state minimum wage |
Double time never comes from federal law. Any 2x rate you see is a state rule or a contract. The overtime pay calculator has a separate double-time hours input for exactly that reason.
What overtime does to the paycheck in 2026
Overtime is computed on gross pay, before taxes. Taxes then apply to the larger gross, which is why an overtime check often feels like it lost more to withholding than it should. That withholding story has its own article: is overtime taxed more?
As far as FICA is concerned, overtime is just wages. Social Security withholding is 6.2% on wages up to the 2026 wage base of $184,500, and Medicare is 1.45% with no cap.
The “no tax on overtime” deduction from the One Big Beautiful Bill applies to tax years 2025 through 2028. It allows a deduction of up to $12,500 for single filers ($25,000 married filing jointly), phasing out above $150,000 of MAGI ($300,000 joint). It is an income-tax deduction claimed on Schedule 1-A, not a payroll exemption, so FICA is still withheld all year long.
Two limits people miss. Only the premium half qualifies: on a $22 regular rate paid at $33, the $11 an hour above straight time is the qualified overtime compensation. The overtime also has to be required by FLSA section 7, so California’s daily overtime and any contractual overtime above the federal requirement do not qualify.
Example E: how much of a year’s overtime qualifies
Eight overtime hours a week for 50 weeks at a $22 regular rate:
- Premium per week: 0.5 x $22 x 8 = $88
- Annual qualified overtime: $88 x 50 = $4,400
Comfortably under the $12,500 cap. A quick shortcut for straight time-and-a-half pay: total overtime pay divided by 3 gives you the premium half. That is the method in IRS Notice 2025-69 for tax year 2025, when W-2s did not break the figure out separately. Starting with tax year 2026, W-2s report qualified overtime on their own line. Bonus withholding follows different rules again, covered in why is my bonus taxed so high?
The one rule to remember
Find the regular rate first, then multiply. Every hard overtime question in this article (the bonus, the shift differential, the salaried nonexempt worker) is really a question about what the regular rate is that week.
Run a single week through the overtime pay calculator, check what those hours cost your business with the employer cost calculator, or get WorkLogs44 and run overtime, withholding, and employer SUTA and FUTA across your whole team in one pass.
Frequently Asked Questions
How do you calculate overtime pay?
Find the regular rate first, which is total pay for the workweek divided by total hours actually worked, then multiply by 1.5 and by the number of hours over 40. At a $22 regular rate, 6 overtime hours pay 6 x $33 = $198 on top of 40 x $22 = $880, for $1,078.
Is overtime 1.5 times my hourly wage?
Only if your hourly wage is your whole paycheck. The FLSA multiplies the regular rate, which folds in nondiscretionary bonuses, commissions, and shift differentials. With a $120 weekly production bonus on 48 hours at $20, the regular rate is $22.50 and overtime pays $33.75 an hour, not $30.
Do bonuses count toward overtime pay?
Nondiscretionary ones do. If the bonus was promised in advance or follows a formula, such as production, attendance, safety, or retention, it goes into the regular rate and raises the overtime rate. Only truly discretionary bonuses, where the employer decides both the fact and the amount at the end of the period, are excluded under 29 CFR 778.208.
How is overtime calculated when I work two different pay rates?
Use the weighted average. Add straight-time earnings at every rate, divide by total hours worked, and pay half that rate as the premium on hours over 40. 30 hours at $18 plus 18 hours at $21 gives a $19.125 regular rate and $76.50 of overtime premium under 29 CFR 778.115.
Do salaried employees get overtime pay?
Yes, if they are nonexempt. Salary alone does not create an exemption, because the job must also meet a duties test and clear the federal salary floor of $684 a week ($35,568 a year). For a nonexempt salaried worker, divide the weekly salary by the hours it was meant to cover to get the regular rate.
Can my employer average my hours across two weeks?
No. Each workweek stands alone under 29 CFR 778.104. A biweekly period with a 32-hour week and a 48-hour week is not 80 straight-time hours, because week two owes 8 hours of overtime even though the two-week total is 80.
Does my employer have to pay for overtime I did not get approved?
Yes. Work suffered or permitted is work time, and the reason is immaterial under 29 CFR 785.11. An employer can discipline you for breaking an overtime policy, but it still has to pay for the hours you actually worked.
Is overtime tax-free in 2026?
No. The 2025 to 2028 deduction lets you deduct up to $12,500 ($25,000 married filing jointly) of the premium half of FLSA-required overtime on Schedule 1-A, phasing out above $150,000 MAGI ($300,000 joint). Social Security and Medicare are still withheld on every overtime dollar, and only the extra half, $11 an hour on a $22 regular rate, qualifies.