How to Calculate Overtime Pay

Quick overtime formula

The core overtime formula is simple when the regular rate, overtime hours, and multiplier are known. The practical challenge is making sure each input is correct. The regular rate may not always be just the base hourly wage, and overtime hours may depend on the workweek or other applicable thresholds.

For many U.S. federal overtime examples, covered nonexempt employees must receive overtime pay at not less than one and one-half times the regular rate for hours worked over 40 in a workweek. State laws, local rules, industry rules, union agreements, and company policies may provide different or additional benefits.

overtimeRate = regularRate x overtimeMultiplier
overtimePay = overtimeHours x overtimeRate
totalGrossPay = regularPay + overtimePay + doubleTimePay

Step 1: Find the regular rate

Start with the regular rate of pay. For a straightforward hourly worker, this may be the regular hourly wage. For other compensation arrangements, the regular rate can be more complex and may include certain nondiscretionary bonuses, commissions, shift differentials, or other compensation.

If you are using a salary-based estimate, convert the salary to a weekly amount and divide by standard weekly hours. That produces an estimated hourly rate for planning, but it does not decide exemption status or legal eligibility.

Step 2: Find overtime hours

Next, identify which hours are overtime hours. Under the FLSA, the workweek is the relevant weekly period for many federal overtime calculations. A common federal example is hours worked over 40 in a workweek for covered nonexempt employees.

Do not average two workweeks together for a federal weekly overtime estimate. If one week has 45 hours and the next has 35 hours, the first week may still have overtime hours even though the two-week average is 40.

Step 3: Apply the overtime multiplier

Multiply the regular rate by the overtime multiplier. Time and a half uses 1.5x. Double time uses 2x. A custom policy may use a different multiplier. Keep categories separate when a week contains more than one premium rate.

The FLSA does not require extra pay simply because work is performed on Saturdays, Sundays, holidays, or regular rest days unless overtime hours are worked on those days. Other laws, contracts, union agreements, or employer policies may provide additional premiums.

Step 4: Add regular pay and overtime pay

Regular pay is regular hours multiplied by the regular rate. Overtime pay is overtime hours multiplied by the overtime rate. Double-time pay, if applicable, is double-time hours multiplied by two times the regular rate. Add the categories to estimate gross pay.

Gross pay is not take-home pay. Taxes, benefit deductions, retirement contributions, garnishments, and payroll adjustments may reduce the final paycheck.

Example for hourly employees

An hourly employee earns $22 per hour, works 40 regular hours, and works 6 overtime hours at 1.5x. Regular pay is $880. The overtime rate is $33. Six overtime hours create $198 in overtime pay. Total estimated gross pay is $1,078.

Example for salary-based estimates

A salary-based estimate starts with the salary period. If annual salary is $52,000 and the standard week is 40 hours, weekly salary is $1,000 and the estimated hourly rate is $25. At 1.5x, five overtime hours would be estimated at $187.50.

Example with double time

A worker earning $30 per hour has 40 regular hours, 3 overtime hours at 1.5x, and 2 double-time hours. Regular pay is $1,200. Overtime pay is $135. Double-time pay is $120. Estimated gross pay is $1,455.

Common mistakes

Common mistakes include using total hours as overtime hours, entering the overtime rate instead of the regular rate, forgetting unpaid breaks, treating weekends as automatic overtime, and assuming salary always means exempt from overtime.

Another mistake is ignoring the regular rate when bonuses, commissions, or shift differentials are involved. If those amounts affect the regular rate under applicable rules, a simple base-wage calculation may be incomplete.