How Much is Overtime Pay

How much is overtime pay and what does the term refer to? When asking how much is overtime pay, the term generally refers to hours worked in excess of 40 hours per week.

Most places of business consider the first 40 hours worked as regular time hours. Any hours that are worked overtime must be calculated separately each week. They cannot be averaged or added to another week’s work. The only hours that can be added to the calculations are hours that were actually worked. Any time for vacation, sick leave, or “comp time” are usually not counted.

What is overtime pay?

Overtime pay is the amount of cash paid to employees who have worked more than 40 hours during a workweek. Overtime pay is required to be paid on the usual payday for that pay period during which the hours were worked.

Definition of workweek for overtime pay

Federal law defines a single workweek as 7X24 = 168 hours. It does not, however, require that a standard workweek be from Monday through Friday during the hours of 9 to 5. A workweek can be started on any hour of any of the days of the week, and it may be different than for other employees. Overtime pay is to be given for hours worked on Saturdays and Sundays, as well as on holidays or other days of rest. Extra pay is to be given when working on weekends or nights. Overtime pay must also be given for working on standby duty; this occurs if you are required to carry a company cellphone, except when you are not allowed to use the standby time for any personal uses. Overtime cannot be earned when rules are in place to limit it.

Mandatory overtime

When it comes to how many hours you can work overtime, Federal law does not place any limit on it. It does place limits on how many hours a child can work overtime in the labor laws for children. An employer can force an employee who is 16 and older to work overtime, and when there is hazardous duty, the person must be at least 18. When an eligible worker works mandatory overtime, they must be paid in overtime pay.

The effects of working long hours are going to be fatigue, poorer quality of work, mistakes and errors. The employees in a few industries, such as pilots and truck drivers, have limited hours that they can work. Another field where hours are in the process of trying to be limited is nursing. The Safe Nursing and Patient Care Act of 2007 has not yet been passed, but a few states are working to pass laws relating to overtime for nurses.

How much is overtime pay?

Exactly how much you will be paid for overtime hours depends on your employee type and what Federal and state laws apply. If you are classified as a non-exempt employee who works for hourly wages, the Fair Labor Standards Act (FLSA) requires you to be paid for time worked in excess of the standard 40-hour workweek.

Overtime pay must be a minimum of one-and-a-half times that employees regular pay rate. For an employee who makes minimum wage, which is $7.25 per hour, every hour more than the required 40 hours will be paid at the rate of $10.88 (minimum). On some days, such as on a holiday, overtime is often double-time, or twice your regular hourly wage. Most of the time, getting paid double time is based on an agreement between the employee and the employer. Federal laws requiring double time pay do not exist.

Overtime pay is not required by the Fair Labor Standards Act (FLSA) for working at night, or on weekends or on holidays. It is required only when an employee works more than 40 hours in a week. Employers will often pay more for working on weekends, nights, or on holidays, but it is completely voluntary on their part.

How to double your overtime rate

People who work are ultimately the one responsible for how much they make from each working hour. When wages earned from one hour are spent on non-essential items, then for each hour you work you have only earned one hour’s worth of pay. Instead of making frivolous purchases, you invest that one hour’s worth of work. If you take your overtime pay and invest it, and do not touch it, you could leave it long enough to double its value. At that time, you could withdraw only the original amount of overtime pay, and then let the money double again. This enables you to repeatedly increase how much you earn.

Exemptions to overtime pay

There are currently about 120 million Americans in the workforce. Just about 50 million of them are completely exempt from laws governing overtime.

How much is overtime pay?

Some of these exempt employees do not get paid for overtime. In order to determine who is exempt and who is not, the criteria is rather complex. Companies will often choose to classify an employee as non-exempt if they are uncertain. This enables them to avoid lawsuits if they should have to demand repayment of back pay.

Three types of employees are generally exempt. This includes creative, professional, and administrative employees if they receive a salary and get paid more than $455 per week. They must also:

  • Manage a minimum of two employees.
  • Make decisions independently.
  • Apply innovative thought or advanced knowledge.

Other specific types of employment are also exempt. These include: employees of airlines; aircraft salespeople; recreational/amusement employees that work in forests/national parks/Wildlife Refuge System; babysitters who work casually; boat salespeople; people who buy agricultural products; companions for the elderly; rural country elevator workers; live-in domestic workers; salespeople of farm implements; federal criminal investigators; firefighters that work in small public fire departments (fewer than5 firefighters); fishing; employees working in forestry firms (fewer than 9 employees); employees that transport fruit and vegetables; homeworkers making wreaths; house-parents who work in non-profit institutions; livestock auction workers; drivers of local deliveries and driver’s helpers; employees of small lumber companies (less than 9 employees); employees of motion picture theaters; newspaper delivery; police officers in small police departments (less than 5 officers); employees in radio stations in small markets; seaman on American and non-American vessels; employees working in sugar processing; switchboard operators; drivers of taxicabs; employees of TV stations in small markets; and salespeople who sell trucks and trailers.

Overtime pay for tipped workers

When an employee makes more than $30 from tips each week, they are considered to be a “tipped employee.” Employers can take a “tip credit,” which reduces their cash wage debt to less than the federal minimum wage. Tip workers need to remember that their regular rate of pay (hourly wage plus hourly tips) is never allowed to be less than the minimum wage.

When employers figure the overtime rate for tipped workers, they should never do this by multiplying the cash wage given to the employee. Instead, it must always be by multiplying minimum wage by 1.5, and then taking the hourly tip rate and subtracting it. An employer is actually breaking the law when they just use the cash wage figure. Employees can file a lawsuit against their employer for twice the wages owed, and retaliation is not permitted.

How to calculate overtime pay

Most of the time, calculating just how much overtime is due is relatively easy. It can be complicated in some situations, however, depending on how compensation is given to the employee. They may be paid hourly, by commission, or by salary. The regular pay rate is simply the total hourly rate for normal hours during the week. All overtime pay is determined by multiplying the regular pay rate by 1.5. The gross overtime pay is calculated by multiplying the overtime pay rate by the total number of hours worked overtime.

Overtime pay calculation - method for hourly employees

For employees who are paid by the hour, the calculating overtime pay can be performed by following three steps:

  • Calculate the regular pay.
  • Determine the rate for overtime pay (regular rate multiplied by 1.5).
  • Calculate overtime pay owed (number of overtime hours multiplied by overtime pay rate = gross overtime pay.

Overtime pay calculation - method for salaried employees

Calculating the pay for employees who are on salary can be determined by first knowing the number of hours the salary was intended to cover. The method used to calculate overtime pay depends on whether the salaried employee is paid for a standard workweek of 40 hours, a “fluctuating workweek,” or a “fixed workweek.”

Overtime pay calculation - method for salaried employees (based on standard workweek of 40 hours)

An employee who is paid on a standard workweek of 40 hours can have their overtime pay calculated in three steps: calculate the regular rate of pay, determine the overtime pay rate – multiply the regular pay rate by 1.5, and calculate the gross overtime pay by multiplying the number of overtime hours by the overtime pay rate.

Overtime pay calculation - method for salaried employees (based on fixed workweek less than 40 hours)

When a salaried employee is expected to work less than 40 hours, the method used to calculate overtime pay is basically the same as regularly salaried employee. The difference is that overtime pay can only be given for more than 40 hours. Once the salary is divided by the number of hours expected to be worked, this will provide the hourly basis. Multiply that number by 1.5 to determine hourly overtime pay, and then multiply that only by the number of hours above 40 to get total overtime pay.

In addition to the overtime hours, an employee who is not expected to work 40 hours will also need to be paid at the regular pay rate for those hours between their expected hours and 40 hours per week.

Calculating the overtime pay for a salaried employee is also different if their salary covers more than 40 hours per week. They would only be entitled to receive 1.5 times their hourly pay once their regular amount of hours has been reached. For hours more than 40 but less than what their pay requires is calculated at a rate of .5 times their regular pay rate.

When an employee accepts a salary for a specific number of hours above a standard 40 hour week (45, 50, etc.), they are actually agreeing that their salary will cover the hours up to the stated amount. This includes the extra hours above 40. Because of the agreement, the employer does not need to pay for those agreed upon overtime hours at the rate 1.5 above the regular pay rate. For the hours above the standard 40 hour week and the agreed upon extra hours, the employer only needs to pay .5 time the regular pay rate for the hours between 40 and the contractually agreed upon extra hours.

Overtime pay calculation - method for salaried employees (based on fluctuating workweek)

The employees who do not work a regular workweek, known as a fluctuating workweek or Chinese workweek, but agree to a fixed salary, require that their overtime pay be calculated differently. Their hours will often vary from one week to the next.

Since the employee understands that hours and pay will not be regular, then the salary promised is for all hours worked, whether few or many. The first step in calculating overtime pay is to divide the salary earned by the hours worked. Note that the salary earned will vary from one week to the next. For all hours over 40, they are to receive a rate that is .5 times the regular pay rate.

Overtime pay calculation - method for salaried employees (based on piece-rate work)

Overtime pay for employees who are salaried based on piece work can be calculated by the pay for the week and dividing it by the number of hours worked. This will give you the hourly rate. The overtime pay can then be calculated by multiplying all hours above 40 by 1.5. Be aware that this calculation does not consider the actual piece-rate of the employee.

If you need help in understanding how much is overtime pay and how it will affect you or your business, you can post your legal need on the UpCounsel’s marketplace. UpCounsel only uses lawyers who have graduated in the top five percent of the top law schools such as Harvard Law and Yale Law, and who also have an average of at least 14 years of legal experience. Many of them have worked with or on behalf of such companies as Google, Stripe, and Twilio.