Overtime Pay
$$\text{OT Pay} = \text{Hourly Rate} \times \text{Multiplier} \times \text{OT Hours}$$
What is Overtime Pay?
Overtime pay is the additional compensation employees earn for hours worked beyond a standard threshold - most commonly 40 hours per workweek in the United States. Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive at least 1.5 times their regular rate of pay for every overtime hour.
The overtime premium - the extra amount above base pay - is the key financial benefit of working overtime. At 1.5x, a $20/hr worker earns an extra $10 for each overtime hour on top of their normal $20, making the total overtime rate $30/hr.
When to use Overtime Pay
Calculate overtime pay whenever you work beyond the standard threshold for your country or employment contract. Use the overtime rate to verify your paycheck, compare the value of overtime versus time-off-in-lieu, or plan your earnings for a high-hours week.
Worked examples
| Scenario | Regular pay | Overtime pay | Total |
|---|---|---|---|
| $20/hr, 40 reg + 10 OT at 1.5x | $800 | $300 | $1,100 |
| $25/hr, 40 reg + 8 OT at 1.5x | $1,000 | $300 | $1,300 |
| $30/hr, 40 reg + 5 OT at 2.0x | $1,200 | $300 | $1,500 |
Common pitfalls
Overtime pay is taxed as ordinary income - there is no special higher rate. However, your paycheck withholding may look larger during overtime weeks because payroll systems annualise your earnings. This is a timing difference, not a permanent tax increase. Also note that not all employees qualify: exempt salaried workers above the FLSA threshold may not receive overtime.
Frequently asked questions
What is the overtime rate in the US?
The US FLSA requires at least 1.5 times the regular hourly rate for hours over 40 per workweek for non-exempt employees. California also has a daily rule: 1.5x after 8 hours in one day, and 2x after 12 hours in one day or on the seventh consecutive day of work.
Is overtime pay mandatory for salaried workers?
Salaried workers earning below $684 per week ($35,568 annually) are entitled to FLSA overtime regardless of title. Above that threshold, exemption depends on job duties - executive, administrative, and professional roles may qualify as exempt. Job title alone does not determine overtime eligibility.