How to Calculate Overtime Pay Step by Step
A step-by-step guide to confirming overtime eligibility, finding your regular rate, identifying overtime hours, and calculating total weekly pay.
Confirm You Are Eligible for Overtime
Before calculating overtime, confirm that federal or state law requires your employer to pay you overtime. Under the FLSA, non-exempt employees must receive overtime for hours beyond 40 in a workweek. Most hourly workers are non-exempt and clearly eligible.
Salaried employees may or may not be exempt. Generally, employees classified as executive, administrative, or professional who earn above a certain weekly salary threshold are exempt. As of 2024, the federal threshold is $684 per week ($35,568 annually). Employees below this threshold must receive overtime even if they are classified as salaried.
If you are uncertain about your classification, check with your HR department or consult the Department of Labor's guidance. Misclassification is common, and employees who should receive overtime but do not have legal recourse.
Calculate Your Regular Hourly Rate
For hourly employees, the regular rate is typically your hourly wage rate. However, if you receive non-discretionary bonuses, commissions, or other forms of compensation in the same workweek, these amounts generally must be included when calculating the regular rate for overtime purposes.
To include a non-discretionary bonus in the regular rate calculation, add the bonus to your total straight-time earnings for the week, then divide by total hours worked to find the adjusted regular rate. The overtime premium is then 0.5 times this adjusted rate (not the full 1.5 times, since straight time was already counted in the base calculation).
For salaried non-exempt employees who are eligible for overtime, the regular hourly rate is calculated by dividing the weekly salary by the number of hours the salary is intended to cover. If your weekly salary covers 40 hours, divide by 40 to find your regular rate.
Identify Your Overtime Hours
Count all hours actually worked in the workweek. Do not include paid time off, sick leave, or holidays in this count — only actual hours worked count toward the 40-hour threshold.
Under federal law, any hours worked beyond 40 in the workweek are overtime hours. If you worked 47.5 hours, you have 7.5 hours of overtime. If you worked 42 hours, you have 2 overtime hours.
Keep track of your own hours even if your employer does too. A simple daily log of start time, end time, and any breaks helps you verify your paycheck is accurate. Discrepancies between hours you recorded and hours your employer used to calculate pay are worth investigating.
Multiply by Time and a Half
Your overtime rate is 1.5 times your regular hourly rate. Multiply your regular rate by 1.5 to find the overtime rate. If your regular rate is $18 per hour, your overtime rate is $18 times 1.5, which equals $27 per hour.
Multiply your overtime hours by the overtime rate to find your overtime earnings. Using the example above with 7.5 hours of overtime at $27: 7.5 times $27 equals $202.50 in overtime earnings.
Some employers calculate overtime using a half-time premium approach instead. They pay straight time (regular rate) for all hours worked, then add a half-time premium (0.5 times regular rate) for each overtime hour. The result is the same total as the time-and-a-half method when applied correctly.
Add Regular and Overtime Pay Together
Your total weekly pay is your regular earnings for the first 40 hours plus your overtime earnings for hours beyond 40. Using the full example: 40 hours at $18 per hour equals $720 in regular pay. 7.5 overtime hours at $27 per hour equals $202.50 in overtime pay. Total weekly gross pay is $920.50.
Verify this against your paycheck. Check that your employer used the correct number of hours, the correct regular rate, and the correct overtime rate. Errors in any of these inputs produce incorrect pay. If you find a discrepancy, bring it to your payroll department with your own records as documentation.
Note that gross overtime pay is subject to federal income tax withholding, state income tax, and FICA taxes just like your regular pay. The tax treatment of overtime pay is the same as regular wages — there is no special overtime tax rate. Your net overtime pay will be reduced by withholding proportionally.