Overtime pay
Overtime pay is the extra wages owed to a non-exempt employee for hours worked beyond 40 in a single workweek, calculated under the Fair Labor Standards Act at 1.5 times the employee's regular rate of pay. A workweek is a fixed, recurring 168-hour period the employer defines; overtime is calculated within that single week, never averaged across two weeks.
How the regular rate is calculated
The regular rate that overtime is based on is not always the same as an employee's stated hourly wage. It includes most forms of compensation for the week, hourly wages, non-discretionary bonuses, shift differentials, and commissions, divided by the total hours worked, before the 1.5 multiplier applies. An employee who works two or more different pay rates, or job classifications, in the same week has their regular rate calculated as a weighted average across all the hours and rates worked that week, not a flat rate from either job alone. Getting this weighted-average calculation wrong is one of the most common sources of overtime underpayment, since it requires combining every rate and every hour before applying the overtime multiplier, not just multiplying the primary hourly rate by 1.5.
Who is entitled to overtime pay
Only non-exempt employees are entitled to overtime pay; exempt employees, who meet the Fair Labor Standards Act's salary and duties tests, receive no additional pay no matter how many hours they work in a week. Many states also require daily overtime after a set number of hours in a single day, in addition to the federal weekly threshold, and set their own, sometimes higher, overtime multipliers for certain circumstances. An employer that misclassifies a non-exempt worker as exempt to avoid paying overtime is liable for the unpaid overtime going back through the applicable statute of limitations, plus potential penalties.
Calculating a weighted-average regular rate by hand, across multiple pay rates or job classifications in the same week, is exactly the kind of overtime math that produces underpayment errors. WageTime computes weighted-average overtime automatically whenever someone works two or more rates or classifications in a week, alongside minimum-wage processing at the federal, state, and local levels.
See how WageTime handles overtimeFrequently asked
Does overtime pay apply to salaried employees?
Only if they are non-exempt. Paying someone a salary does not automatically exempt them from overtime; a salaried employee who doesn't meet the FLSA's duties test is still entitled to overtime for hours past 40 in a week.
Is overtime always calculated weekly, never over two weeks combined?
Yes, under federal law. Working 30 hours one week and 50 the next earns overtime for the 10 hours over 40 in the second week, even though the two-week average is only 40 hours.