How Overtime Pay Works

Built & reviewed by Nandu Kannan · Overtime rules cited to primary statutes

Overtime sounds simple — "time and a half after 40" — and for a worker paid a single hourly rate with no bonuses, it is. But the Fair Labor Standards Act (FLSA) actually requires 1.5× your regular rate of pay, a defined legal term that is often higher than your base wage. Getting that distinction wrong is one of the most common ways employees are underpaid. Here's how the whole system works, with the math shown.

The basic rule: 1.5× after 40 hours in a workweek

Under 29 U.S.C. §207(a), covered non-exempt employees earn at least one and one-half times their regular rate for every hour over 40 in a workweek. Key mechanics:

The workweek is the unit. A workweek is a fixed, recurring 168-hour period chosen by the employer (e.g., Sunday 12:00 a.m. to Saturday 11:59 p.m.). Each week stands alone — an employer cannot average a 30-hour week against a 50-hour week to avoid overtime (29 CFR §778.104).
Only hours worked count. Paid holidays, vacation and sick days don't count toward the 40 unless you actually worked them.
No federal daily overtime. Hours per day are irrelevant federally; only California, Alaska, Colorado, and Nevada add daily overtime rules.
No federal weekend or holiday premium. Saturday work pays straight time unless it pushes the week past 40 or a contract says otherwise.

Baseline example: $18/hour, 47-hour week. Regular pay: 40 × $18 = $720. Overtime: 7 × $18 × 1.5 = $189. Gross: $909. Run your own numbers in the overtime calculator or the quick time and a half calculator.

The regular rate of pay: what must be included

The regular rate is all compensation for the workweek (minus a short list of statutory exclusions) divided by all hours worked. Under 29 U.S.C. §207(e), the rate must include:

Nondiscretionary bonuses — production, attendance, quality, safety and retention bonuses; anything promised in advance.
Shift differentials — extra pay for nights or weekends (estimate yours with the shift differential calculator).
Commissions and piece-rate earnings.
On-call pay and most other wage supplements.

It excludes:

Truly discretionary bonuses and gifts.
Pay for hours not worked (vacation, holiday, sick pay).
Expense reimbursements.
Premium pay already at 1.5× or higher (which can instead be credited against overtime owed).

Worked example: a bonus raises your overtime rate

You earn $18/hour, work 45 hours, and receive a $90 nondiscretionary production bonus for the week.

Straight-time earnings: 45 × $18 = $810, plus the $90 bonus = $900.
Regular rate: $900 ÷ 45 hours = $20.00/hour — not $18.
The 45 hours were already paid at straight time inside the $900, so what's owed on top is the half-time premium: 5 OT hours × $20.00 × 0.5 = $50.00.
Gross: $900 + $50 = $950. An employer who paid 5 × $18 × 1.5 = $135 on the base rate alone, ignoring the bonus, would have underpaid by $5 this week — small per week, large per year, multiplied across a workforce.

Worked example: two jobs, one employer (blended rate)

Work two different rates in one week and overtime is owed on the weighted average, not the rate of the job you happened to be doing in hour 41 (29 CFR §778.115). Say 30 hours as a server at $16 and 15 hours as a banquet captain at $24:

Total straight-time pay: 30 × $16 + 15 × $24 = $480 + $360 = $840.
Regular (blended) rate: $840 ÷ 45 = $18.67/hour.
Overtime premium owed: 5 × $18.67 × 0.5 = $46.67. Gross ≈ $886.67.

The blended overtime rate calculator does this weighted-average math for up to multiple rates — it's one of the most commonly botched payroll calculations.

Common employer violations to watch for

Off-the-clock work — pre-shift setup, post-shift closing duties, working through unpaid lunches, after-hours email. If the employer knows about it, it's compensable time.
Paying overtime on the base rate only — ignoring bonuses, commissions, or shift differentials in the regular rate (the examples above).
Misclassification — calling workers "exempt" or "salaried" (see salaried employees and overtime) or "independent contractors" to avoid overtime entirely.
Averaging across weeks — offsetting a 50-hour week with a 30-hour week in the same pay period. Illegal; each workweek stands alone.
Comp time in the private sector — "take Friday off next week instead" does not satisfy FLSA overtime for private employers.
Improper rounding — time-clock rounding that always favors the employer. See our guide to time clock rounding rules.

If any of these look familiar, keep your own record of hours — the timesheet calculator or the time card calculator make it a two-minute weekly habit, and a contemporaneous record is powerful evidence. Unpaid-overtime claims can be filed with the DOL Wage and Hour Division at no cost.

State rules can pay more

The FLSA is a floor. Four states add daily overtime (California even adds double time after 12 hours in a day), Kentucky adds a 7th-day premium, and several states set higher minimum wages that raise the dollar value of every overtime hour — compare yours on the minimum wage by state table. Find your state's exact rule in our overtime laws by state guide or pick your state at overtime by state. When state and federal law differ, you're entitled to whichever pays more.

Put numbers on it

The fastest way to sanity-check a paycheck: enter your daily hours and rate into the overtime calculator, then run the gross through the paycheck calculator to see the take-home after taxes. If the result doesn't match your pay stub, you now know exactly which line to ask payroll about.

Frequently asked questions

How is overtime pay calculated?

Multiply your regular rate of pay by 1.5, then by the number of hours over 40 in the workweek. Example: $20/hour × 1.5 = $30 per overtime hour; a 45-hour week pays 40 × $20 + 5 × $30 = $950. If you earn bonuses or shift differentials, your regular rate is higher than your base wage and the overtime premium grows with it.

What is the regular rate of pay?

Your total compensation for the workweek (with a few legal exclusions) divided by total hours worked that week. It includes nondiscretionary bonuses, commissions, shift differentials and on-call pay. It excludes discretionary bonuses, gifts, paid leave for hours not worked, expense reimbursements, and premium pay already at 1.5× or more (29 U.S.C. §207(e)).

Do bonuses count toward overtime?

Nondiscretionary bonuses — anything promised or expected, such as production, attendance, or retention bonuses — must be included in the regular rate, which raises your overtime pay. Truly discretionary bonuses (a surprise holiday gift, for example) are excluded.

Can my employer give me comp time instead of overtime pay?

Private-sector employers cannot substitute compensatory time off for FLSA overtime pay — overtime must be paid in cash wages in the paycheck for that period. Only state and local government agencies may offer comp time, at 1.5 hours per overtime hour, under 29 U.S.C. §207(o).

Is unauthorized overtime still payable?

Yes. If the employer knows or has reason to know you worked the hours, they must be paid — "suffered or permitted to work" is the legal standard. The employer may discipline you for breaking an approval policy, but it cannot withhold the overtime pay itself.

How far back can I claim unpaid overtime?

The FLSA statute of limitations is 2 years, or 3 years for willful violations (29 U.S.C. §255). Successful claims typically recover the unpaid overtime plus an equal amount as liquidated damages — effectively double. Some state laws allow longer look-back periods.

General information based on the federal FLSA (29 U.S.C. §207, 29 CFR Part 778) and U.S. DOL guidance, current as of June 2026. State law may be more protective. Not legal or payroll advice — for your specific situation, contact the DOL Wage and Hour Division or an employment attorney.