However, this can vary depending on your state’s labor laws and company policies. Now you simply need to calculate your total overtime pay for the week by multiplying your total overtime hours by your overtime rate. The rule is any nonexempt employee who works over 40 hours in a workweek receives overtime pay. Part-time employees work 35 hours or less per week but there may be occasions when they work more.

How to Calculate Overtime

In addition, the total annual compensation level for «highly compensated employees (HCEs)» has been increased from the current level of $100,000 to $107,432 a year. For anyone falling under the FLSA, which defines overtime pay for the nation, you must count hours over 40 in a workweek, even if your state has a higher threshold. The higher number is for FLSA-exempt businesses still under state law.

Which employees are entitled to overtime pay?

If those extra hours put them over 40 hours for a single workweek, then you’ll need to pay them overtime. Overtime gets confusing when it comes to salaried versus hourly employees. When most people talk about overtime, it’s typically in the context of a 40-hour How To Calculate Overtime Pay workweek paid on an hourly basis. Calculate your overtime rate given your standard pay rate and overtime multiplier. Optionally enter the hours worked to calculate your total overtime pay. Other states may have different regulations that change each year.

Calculating Overtime for Hourly Employees

Taking on new tasks, making your boss’s job easier, and going above and beyond are all ways to have overtime hours approved and work towards a future pay increase. Some states, like California, calculate overtime daily, which means that overtime is paid for any hours worked over 8 in a given day. Whether you are eligible for overtime pay depends on the nature of your job, the state’s law in which you work, and how many hours you have worked in a given week. If you offer an employee a bonus for completing a task that takes longer than their 40-hour workweek, you may owe overtime pay for the time they spent on the task. The DOL website shows how to calculate the amount due to an employee who worked a 43-hour week with a $50 bonus.

How to Calculate Overtime (+ Free Overtime Calculator)

While the overall rule is simple, there are different exceptions and exemptions, and in some states (like California and Colorado), rules can get complex. The key is to look at what duty is central to the employee’s job. Some employees may have different pay scales for different duties, such as sales vs back room. In this case, you take the weighted average of the pay earned that workweek and use it to determine overtime, regardless of what pay schedule that overtime was done under. Whether it’s due to seasonal fluctuations, an end-of-month rush, or a week when your team just can’t get everything done during business hours, employees may have to work overtime.

Does working on weekends or holidays automatically mean overtime pay?

• The standard overtime rate is one and a half times the hourly rate for each hour over 40 hours worked.
• Some of the other provisions of the act protect child workers under the age of 16 from hazardous occupations.
• Investigators recommend changes to ensure such violations don’t happen again.
• The Fair Labor Standards Act (FLSA) recognizes executive, administrative, professional, outside sales, and some computer employees as exempt.
• The section was previously interpreted to mean that only an employee’s base salary, and not any additional regular payments they may receive, had to be increased by time-and-a-half or two times, as appropriate.
• Certain positions, especially managerial and executive roles, are often exempt from receiving overtime compensation.
• You can calculate overtime pay by multiplying your regular hourly wage by an overtime rate (typically 1.5) and then multiplying this rate by the number of overtime hours that you have worked.

The FLSA does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, unless overtime is worked on such days. Under federal law, overtime compensation is at least 1.5 times the employee’s regular pay rate (time and a half). It requires that eligible workers who work more than a 40-hour week be paid 1.5 times their base pay rate for every hour worked over their usual amount. This doesn’t necessarily apply to work performed on nights, weekends, and holidays, unless mentioned in the employment agreement—or if those hours are also in excess of 40 for that week. Certain states may require that employers pay an overtime rate on some holidays, however.

• And a challenge to the Trump administration’s 2019 rule (which raised the threshold from to $455 to the current level of $684) is on appeal in the Fifth Circuit.
• In this case, you take the weighted average of the pay earned that workweek and use it to determine overtime, regardless of what pay schedule that overtime was done under.
• Anytime a worker who is eligible for overtime works more than 40 hours per week, they will earn overtime pay.
• Take CNBC’s new online course How to Ace Your Job Interview to learn what hiring managers are really looking for, body language techniques, what to say and not to say, and the best way to talk about pay.
• Since there is no legal limit on the number of hours employees who are 16 or older can work in a workweek, you must determine whether you have to pay them overtime or not.

While most overtime schedules start at 40 hours per week, you can calculate daily overtime as anything over eight hours. California sets a second threshold if an employee works more than 12 hours. The Labor Department also said it raised the threshold for “highly compensated” employees who only need to perform one of the duties of executive, administrative or professional workers to be exempt from overtime.

If you have payroll software, it may already have those tables as part of its program, so you don’t have to do the research. As a small business owner, you don’t want to run afoul of the FLSA’s overtime rules. Failing to pay overtime opens you up to lawsuits from current and former employees, and you could also be liable for the unpaid overtime.

Don’t confuse shift differentials with overtime pay, which is federally mandated and kicks in when a non-exempt employee works more than 40 hours in a standard workweek. As of January 2020, salaried employees who earn over $684 per week, or $35,568 annually, may be exempt from overtime requirements. Also, the threshold for highly compensated employees is now $107,432 (of which $684 must be paid weekly on a salary or fee basis). Check with your state to verify the overtime rate (state rules are lower in this article)—is it 1.5 times regular pay for all hours worked over 40 in a week or more? Be sure to note whether you need to calculate the daily or weekly overtime, double time vs time-and-a-half, and the maximum number of hours worked before overtime applies. The equation works regardless of how much overtime you offer your employees.