How to Calculate Overtime Pay Correctly in 2026

What is Overtime Pay?

Overtime pay is compensation for hours worked beyond the standard 40-hour workweek (or daily threshold in some states). Under the Fair Labor Standards Act (FLSA), eligible employees must receive at least 1.5× their regular hourly ratefor overtime hours.

Federal Overtime Rules (FLSA)

The Fair Labor Standards Act requires overtime pay for non-exempt employees who work more than:

• 40 hours per week (most common threshold)
• Overtime rate: 1.5× regular hourly rate (time-and-a-half)

Who is Exempt from Overtime?

Not all employees qualify for overtime. Exemptions include:

• Executive, administrative, and professional employees earning above $844/week ($43,888/year as of July 2024)
• Computer employees earning $27.63/hour or more
• Outside sales employees
• Certain commissioned employees in retail/service industries
• Independent contractors (1099 workers)

State-Specific Overtime Laws

Several states have stricter overtime rules than federal law:

California Overtime Rules

• Daily overtime: 1.5× after 8 hours in a workday
• Double-time: 2× after 12 hours in a workday or 8 hours on the 7th consecutive workday
• Weekly overtime: 1.5× after 40 hours per week

Alaska Overtime Rules

• Daily overtime: 1.5× after 8 hours in a workday
• Weekly overtime: 1.5× after 40 hours per week

Colorado Overtime Rules

• Daily overtime: 1.5× after 12 hours in a workday
• Weekly overtime: 1.5× after 40 hours per week

How to Calculate Overtime Pay: Step-by-Step

Step 1: Determine Your Regular Hourly Rate

If you're salaried, divide your weekly salary by 40 hours:

Regular Rate = Weekly Salary ÷ 40

Example: $800/week salary = $20/hour regular rate

Step 2: Calculate Overtime Rate

For time-and-a-half:

Overtime Rate = Regular Rate × 1.5

Example: $20/hour × 1.5 = $30/hour overtime

Step 3: Count Overtime Hours

Subtract 40 from your total weekly hours:

Overtime Hours = Total Hours - 40

Example: 48 hours worked - 40 = 8 overtime hours

Step 4: Calculate Total Pay

Total Pay = (40 × Regular Rate) + (Overtime Hours × Overtime Rate)

Example: (40 × $20) + (8 × $30) = $800 + $240 = $1,040

Common Overtime Calculation Mistakes

1. Forgetting to Include Bonuses in Regular Rate

Non-discretionary bonuses (production bonuses, attendance bonuses) must be included in the regular rate for overtime calculations.

2. Averaging Hours Across Pay Periods

Wrong: Working 50 hours one week and 30 the next, then averaging to 40/week.

Right: Week 1 has 10 overtime hours. Week 2 has no overtime.

3. Misclassifying Employees as Exempt

Just because an employee is salaried doesn't mean they're exempt from overtime. They must meet salary and job duty tests.

4. Not Paying for All Hours Worked

Overtime applies to all hours worked, including:

• Time spent traveling between job sites
• Mandatory training time
• Time "suffered or permitted to work" (even if not authorized)

Penalties for Overtime Violations

Employers who fail to pay overtime can face:

• Back pay for unpaid overtime (up to 2-3 years)
• Liquidated damages (equal to back pay owed)
• Attorney's fees and court costs
• Civil penalties up to $2,374 per willful violation

Frequently Asked Questions

Do I get overtime if I work 6 days a week?

Under federal law, no. Overtime is based on total weekly hours (40+), not days worked. However, California requires overtime after the 6th consecutive workday.

Can my employer require mandatory overtime?

Yes, unless you have a contract or union agreement. However, they must still pay overtime rates for those hours.

Do weekends or holidays automatically count as overtime?

No. Unless your total weekly hours exceed 40 (or state thresholds), weekend/holiday work is paid at your regular rate.

Can I waive my right to overtime pay?

No. Overtime rights under the FLSA cannot be waived by agreement between employer and employee.

Related Tools

Conclusion

Calculating overtime correctly protects both employees and employers. Always check your state's laws, keep accurate time records, and use our free calculatorsto verify your payroll calculations.

Disclaimer: This guide is for informational purposes only and does not constitute legal or financial advice. Consult with a qualified employment attorney or payroll professional for specific guidance.