How to Calculate Overtime Pay
A complete guide to understanding overtime rules, weekly vs daily overtime, time and a half, and double time calculations for hourly workers.
What is overtime pay?
Overtime pay is extra compensation earned when an eligible worker works more than the overtime threshold set by law, contract or company policy. In many US federal situations, covered non-exempt employees must receive overtime pay after 40 hours in a workweek at a rate of at least one and one-half times their regular rate of pay. Some states and employers use additional rules, such as daily overtime or double time.
Basic overtime formula
The basic formula is: regular pay plus overtime pay. Regular pay equals regular hours multiplied by the regular hourly rate. Overtime pay equals overtime hours multiplied by the hourly rate multiplied by the overtime multiplier. For example, if you worked 45 hours at $20 per hour and overtime starts after 40 hours at 1.5x, your regular pay is 40 × $20 = $800 and your overtime pay is 5 × $20 × 1.5 = $150. Estimated gross pay is $950.
Weekly overtime vs daily overtime
Weekly overtime is based on total hours worked in a defined workweek. Daily overtime is based on hours worked in a single day. Under US federal FLSA rules, overtime is generally calculated by workweek, not by pay period. Some states have additional daily overtime rules, so a worker may need to calculate both daily and weekly overtime depending on location and employer policy.
What is time and a half?
Time and a half means overtime hours are paid at 1.5 times the regular hourly rate. If your regular rate is $18 per hour, time and a half is $27 per hour. If you work 4 overtime hours, those overtime hours would be estimated as 4 × $27 = $108 in overtime pay.
What is double time?
Double time means hours are paid at 2 times the regular hourly rate. For example, if your regular rate is $20 per hour, double time is $40 per hour. Double time rules are not universal and may depend on state law, union agreements, contracts or company policy.
Common overtime mistakes
Common mistakes include calculating overtime after 80 hours in a biweekly period instead of after 40 hours in each workweek, forgetting unpaid meal breaks, ignoring additional paid breaks, using the wrong overtime multiplier, or failing to include all hours worked across different shifts in the same workweek.
Use an overtime calculator
An overtime calculator helps reduce manual errors by separating regular hours, overtime hours, double time hours and estimated gross pay. Enter your total hours, hourly rate, overtime threshold and multiplier to quickly estimate your pay before taxes and deductions.
Disclaimer: This article is for general informational purposes only and does not replace legal, payroll, tax or financial advice. Rules can vary by location, employer, industry, worker classification and contract.
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