What Is Overtime Pay? Complete Guide to OT Rules & Calculations
Last Updated: 2026-01-20
Overtime pay is extra money—1.5× your hourly rate—for hours over 40 per week. Most workers get it. California also pays overtime after 8 hours per day.
What Is Overtime Pay?
Overtime pay is extra money your boss must pay when you work more than 40 hours in one week. The extra hours are paid at 1.5× your normal rate—called "time and a half."
Why does this exist? It rewards you for extra work and makes employers think twice before overworking staff (since extra hours cost 50% more).
Why Overtime Laws Exist
Before 1938, workers had zero protection. Factory workers often worked 60-80 hours/week with no extra pay. The Fair Labor Standards Act (FLSA) changed that.
Today, 143 million American workers are protected. Overtime rules add billions in extra wages each year.
Who Qualifies for Overtime Pay?
Not everyone gets overtime. The law splits workers into two groups based on pay and job type.
Non-Exempt = Gets Overtime ✓
If you're non-exempt, you MUST get overtime for hours over 40/week. Most hourly workers and lower-paid salaried workers are non-exempt.
Retail, restaurant, factory, admin assistants, customer service, healthcare aides, construction, delivery drivers
Exempt = No Overtime ✗
Exempt workers don't get overtime, no matter how many hours they work. You need BOTH high salary AND a qualifying job type to be exempt.
Managers, doctors, lawyers, engineers, outside sales reps, some computer pros ($27.63+/hour)
The Duties Test
High salary alone doesn't make you exempt. Your job must also fit one of these categories:
Exemption Type | Requirements |
|---|---|
| Executive | Manages a team of 2+ people, can hire/fire |
| Administrative | Office work with independent decision-making |
| Professional | Requires advanced degree (doctor, lawyer, etc.) |
| Computer Pro | Programmer/analyst earning $27.63+/hour |
| Outside Sales | Makes sales outside the office |
2024 Salary Threshold
$43,888/year ($844/week)
Earn less than this? You're non-exempt and get overtime, regardless of job title.
Some states set higher thresholds. California requires 2× minimum wage for exempt status.
How Is Overtime Pay Calculated?
Five simple steps:
How to Use
Find your hourly rate
Hourly worker? Use your rate. Salaried? Divide weekly pay by 40. Example: $1,000/week ÷ 40 = $25/hour.
Calculate overtime rate
Multiply by 1.5. Example: $25 × 1.5 = $37.50/hour overtime rate.
Count overtime hours
Federal: hours over 40/week. California: also hours over 8/day.
Multiply
OT hours × OT rate = overtime pay. Example: 10 hours × $37.50 = $375.
Add it up
Regular pay + overtime pay = total. Example: $1,000 + $375 = $1,375.
Overtime Formula
OT Pay = OT Hours × (Hourly Rate × 1.5)
What Counts in Your Rate?
Your overtime rate might be higher than your base rate. Some payments must be included:
Included in Regular Rate
- Base hourly wage
- Production/attendance bonuses
- Shift differentials
- Commissions
Excluded from Regular Rate
- Holiday gifts
- Expense reimbursements
- Already-premium pay (1.5×+)
- Benefits contributions
Ready to calculate your overtime?
Use our free calculator to get instant results
Federal vs. State Overtime Rules
States can add stricter rules. When laws differ, workers get whichever is better for them.
Jurisdiction | Weekly OT | Daily OT | Double Time | Notes |
|---|---|---|---|---|
| Federal (FLSA) | 40 hours | None | Not required | Baseline for most employers |
| California | 40 hours | 8 hours | After 12 hrs/day or 7th day | Strongest protections in U.S. |
| Alaska | 40 hours | 8 hours | Not required | Daily OT like California, no double time |
| Colorado | 40 hours | 12 hours | Not required | Daily OT only after 12 hours |
| Nevada | 40 hours | 8 hours | Not required | Daily OT if rate < 1.5× minimum wage |
Real-World Examples
See exactly how overtime is calculated:
Standard Federal OT
40 hrs × $25 = $1,0008 hours over 40 paid at 1.5× ($37.50)
California Daily OT
8 hrs × $20 = $160CA pays OT after 8 hrs/day, even if weekly total is under 40
California Double Time
4 OT × $27 = $108CA: hrs 1-8 = regular, 9-12 = 1.5×, 13+ = 2×
Salaried Non-Exempt
Salary = $800Salaried workers can still get OT if non-exempt
Common Mistakes
Don't fall for these:
"Salaried = no overtime"
Wrong. You need high salary ($43,888+) AND exempt job duties. A $40K admin assistant still gets OT.
"Average hours across 2 weeks"
Nope. OT is per week. 50 hrs one week + 30 the next = 10 OT hours owed for week one.
"Bonuses don't count"
Production and attendance bonuses must be included in your OT rate calculation.
"Comp time instead of OT pay"
Private employers can't do this. Only government jobs can offer comp time.
"I agreed to no OT pay"
You can't waive overtime rights. Any such agreement is unenforceable.
"Small businesses are exempt"
If you use phones, email, or handle goods crossing state lines, you're likely covered.
Frequently Asked Questions
Yes, for non-exempt workers. Employers can't skip it, even if you agree. Not paying is a federal violation.
No. If you're non-exempt and work 40+ hours, they must pay. File a complaint with the DOL if they refuse.
No. Same tax rate as regular pay. It might push you into a higher bracket, but OT itself isn't taxed differently.
Time and a half = 1.5× (federal standard). Double time = 2× (California after 12 hrs/day or 7th consecutive day).
Yes, if they work 40+ hours in a week. Part-time status doesn't matter—only total hours.
Three tests: (1) Paid salary, not hourly? (2) Earn $43,888+/year? (3) Job duties qualify? All three = exempt.
Document your hours. Raise it with HR in writing. If ignored, file with your state labor dept or federal DOL. You have 2-3 years to claim.
Commuting: no. Travel during work (between sites, to other cities): yes.