How to calculate overtime under federal law

Who gets overtime

Most workers are covered. The FLSA reaches the employees of businesses with at least $500,000 a year in sales or business done, of hospitals, care facilities and schools, and of public agencies. A worker of a smaller business is still covered when their own job is engaged in interstate commerce or in producing goods for it.

Some employees are exempt from overtime. The best known exemptions are for executive, administrative and professional employees, outside sales employees and some computer jobs, each as the Department of Labor defines it. Unless an exemption applies, a covered employee must be paid overtime.

Sources: U.S. Department of Labor, Handy Reference Guide to the FLSA; U.S. Department of Labor, Fact Sheet #23: Overtime Pay Requirements of the FLSA

The rule: hours over 40 in a workweek

A covered employee who is not exempt must be paid at least one and a half times the regular rate for every hour worked over 40 in a workweek. At $22 an hour, each overtime hour pays at least $33.

There is no daily overtime under the FLSA: a 10-hour day is not overtime by itself, and the law does not require extra pay for Saturdays, Sundays, holidays or regular days of rest as such. It also does not limit how many hours a day or days a week an employee 16 or older can be scheduled.

A state law or a contract can require more. California, for example, also pays overtime by the day, and the FLSA does not relieve an employer of that duty.

Sources: U.S. Department of Labor, Fact Sheet #23: Overtime Pay Requirements of the FLSA; U.S. Department of Labor, Handy Reference Guide to the FLSA; 29 CFR Part 778, Subpart B: The Overtime Pay Requirements

How the workweek is counted

A workweek is a fixed and regularly recurring period of 168 hours: seven consecutive 24-hour periods. It does not have to match the calendar week and can start on any day and at any hour. Once set, it stays fixed; it can be changed only if the change is meant to be permanent and is not designed to avoid overtime.

Each workweek stands alone, and hours are never averaged over two or more weeks. If you work 30 hours one week and 50 the next, the 10 hours over 40 in the second week are overtime, even though the two weeks average 40.

All the hours you work for the same employer in the workweek are added up, even if they come from two unrelated jobs for that employer.

Sources: 29 CFR Part 778, Subpart B: The Overtime Pay Requirements; U.S. Department of Labor, Fact Sheet #23: Overtime Pay Requirements of the FLSA

What goes into the regular rate

The regular rate is an hourly rate, but you do not have to be paid by the hour. It is your total pay for the workweek, minus the payments the law leaves out, divided by the hours you actually worked that week. It can never be less than the minimum wage.

It includes all pay for the work except what the law excludes: reimbursed expenses, overtime premiums, true premiums for work on Saturdays, Sundays and holidays, discretionary bonuses, gifts on special occasions, and pay for occasional periods when no work is done. With some exceptions, bonus payments count.

Sources: 29 CFR Part 778, Subpart B: The Overtime Pay Requirements; U.S. Department of Labor, Fact Sheet #23: Overtime Pay Requirements of the FLSA; U.S. Department of Labor, Overtime Pay

When it is paid, and comp time

Overtime earned in a workweek is generally due on the regular payday for the period in which that workweek ends.

Comp time, paid time off instead of overtime pay, is a rule the FLSA writes for state and local government agencies, under set conditions. For other employers, the Wage and Hour Division holds that extra paid vacation in place of the overtime owed does not meet the law: the overtime has to be paid with the wages at the end of the regular pay period.

Sources: 29 CFR Part 778, Subpart B: The Overtime Pay Requirements; U.S. Department of Labor, Fact Sheet #7: State and Local Governments Under the FLSA; Wage and Hour Division, Field Operations Handbook, Chapter 32 (32d03d)

Worked examples

Each week, Monday to Sunday, is run through the time card at $22 an hour, under the federal rule unless it says California.

• Federal: Mon-Fri 9 h, Sat 4.5 h (49.5 h)

  Regular h

  40

  Overtime h

  9.5

  Double h

  0

  Gross pay

  $1,193.50

• Federal: four 10 h days, Mon-Thu (40 h)

  Regular h

  40

  Overtime h

  0

  Double h

  0

  Gross pay

  $880.00

• California: the same four 10 h days

  Regular h

  32

  Overtime h

  8

  Double h

  0

  Gross pay

  $968.00