How Many Hours is Overtime: Everything You Need to Know
Setting the threshold for how many hours is overtime is defined as "the time actually worked beyond a set schedule" under the terms of the Fair Labor Std Act.4 min read
How Many Hours Is Overtime?
Setting the threshold for how many hours is overtime is defined as "the time actually worked beyond a set schedule" under the terms of the Fair Labor Standards Act established in 1938. A set schedule, or work period, is the work week consisting of 7 consecutive days and 40 hours of clock time. Over 40 hours is the determining factor for overtime. There are some jobs where the overtime threshold is different from what the FLSA dictates.
What is the Definition of Overtime?
For clarification purposes, employer's may use the word "overtime" when referring to hours worked past the 40-hour threshold that falls under the FLSA rule for overtime pay.
An employer may also use the word "overtime" to note something other than an employee passing the 40-hour mark. For example, an employer may be talking about "time worked outside of an employee's normal schedule" but unless the time puts the nonexempt employee's work week over 40 hours, the FLSA overtime rules do not apply and no overtime pay is due to the employee.
How Is Overtime Pay for Nonexempt Employees Computed?
Overtime pay for nonexempt employees is based on the total number of hours accrued by an employee in a work week.
Nonexempt employees are eligible for overtime. Those who are not eligible for overtime pay are considered exempt employees.
Overtime pay for nonexempt employees may be based on both hourly and salaried employees. Overtime pay is computed on every hour the employee works past the 40-hour mark in a workweek, regardless of the number of hours an employee works in a single day.
What Is the Fair Labor Standards Act Overtime Rate?
The way an employer calculates overtime pay is based on the rules of the Fair Labor Standards Act. This means using the employee's regular pay rate for straight time to determine the overtime rate. In other words, for a nonexempt hourly employee, time and one-half is the employee's regular rate of pay plus half the regular pay rate.
For nonexempt salaried employees, their salary must be converted to an hourly equivalent to determine the employee's regular rate of pay. This is done by dividing the employee's base salary by the number of hours the employee worked in a workweek.
Three steps determine the regular rate of pay.
- Identify the employee's regular rate of pay. This is the gross hourly rate the employee is paid for work completed during normal work hours.
- Determine the overtime rate of pay by multiplying the employee's regular rate of pay by 1.5. The resulting figure is the rate of pay for overtime.
- Overtime pay is then calculated by multiplying the number of overtime hours worked by the overtime rate of pay. The final figure is an employee's gross overtime wages.
For salaried employees, the steps to determine the regular rate of pay is as follows:
First, determine the number of hours the employee is to be compensated for overtime. This figure is based on whether an employee works a standard 40-hour workweek, a fixed workweek, or a fluctuating workweek.
Overtime for a standard 40-hour week is calculated by:
- Determining the employee's regular rate of pay by dividing an employee's weekly salary by the number of hours it is set to compensate. For a standard salaried employee, this is usually 40 hours.
- Like hourly employees, the overtime rate of pay is determined by multiplying the regular rate of pay by 1.5, which provides the overtime rate of pay.
- The amount of overtime to be pay multiplies the overtime rate by the number of overtime hours worked.
Determining the overtime pay rate for employees working a fixed schedule that is less than 40 hours a week is generally calculated the same way as for an employee who works 40 hours. The rate is determined by dividing the weekly salary by the number of hours the employee is normally compensated. That figure is then multiplied by 1.5 to arrive at the overtime rate for hours worked over 40.
How Is Time Worked Defined Under the FLSA?
- Time spent by employees doing job-related work/activities is considered work time. This time includes the regularly scheduled shift along with any work done for the employer that is outside, or "off the clock" after the normal shift has ended.
- Any time an employee is required to be on the work premises of their employer is considered work time. There are only a few exceptions to this rule.
- All regular time during a shift is considered work time.
- Time spent by an employee performing work-related tasks that the employer permits, regardless of whether it's on the premises or not, is work time.
- Work done at home or another location other than the employer's premises must be counted as work.
- Voluntary work is work that must be counted.
- Unapproved or unauthorized work must also be counted in the workweek provided the employer is permitting the employee to do it.
- Any work completed by nonexempt employees must be counted for computation of pay by FLSA rules. This means the employee cannot accept the benefits of the work performed without counting the time as work time.
- Time spent doing work-related activities before or after the hours of a normal shift is considered work time.
- Calling an employee at home with work-related questions is considered work time.
- Training time is work.
Time not counted as work time includes:
- A leave of absence.
- Meal breaks if the employee is relieved from doing any work during the break period.
- Travel time to and from work.
There are a couple of exceptions to the travel time rule:
- If an employee is dropping off mail or a bank deposit on their way home after their scheduled work day, it is considered work time.
- If an employee goes to work at one location then drives to a second work site, this time is counted as work.
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