How Overtime Pay Works

The Fair Labor Standards Act (FLSA) sets the federal minimum for overtime pay: non-exempt employees must receive at least 1.5 times their regular rate for all hours worked beyond 40 in a single workweek. This threshold is per week, not per day, per pay period, or per month.

The 40-hour threshold is measured within a defined workweek, a fixed recurring period of 168 hours (7 consecutive 24-hour periods). Employers choose which day the workweek starts, but once set, the workweek must remain consistent. It does not have to align with the calendar week or the pay period.

States can and do establish rules that are more generous than the federal minimum, but they cannot go below it. If your state requires daily overtime after 8 hours, your employer must follow the state rule even if the FLSA would not require it.

Most hourly workers qualify for overtime. The FLSA calls these employees non-exempt. Being exempt from the overtime requirement means you do not receive it, not that you are exempt from following the law.

Salaried employees can also be non-exempt and entitled to overtime. To qualify as overtime-exempt under the FLSA's white-collar exemptions, an employee must meet two conditions: they must earn at least $684 per week ($35,568 annually as of 2024), and their primary job duties must fall under executive, administrative, or professional categories as specifically defined by the Department of Labor.

A salaried employee who earns $500/week, below the salary threshold, is non-exempt and entitled to overtime regardless of job title. A salaried employee earning $800/week whose duties do not meet the FLSA's administrative test is also non-exempt. Both the salary level and the duties test must be satisfied.

The calculation is straightforward for hourly workers. Regular pay covers all hours up to 40. Overtime pay is 1.5x the regular rate for all hours beyond 40.

The formula: (Regular rate x 40) + (Regular rate x 1.5 x overtime hours) = total weekly pay. You can also think of it as: (Regular rate x total hours) + (Regular rate x 0.5 x overtime hours). The extra 0.5x represents the overtime premium on top of the straight-time pay already included.

Several states require overtime in situations the FLSA does not mandate. California is the most notable: overtime kicks in after 8 hours in a single day, not just after 40 hours in a week. If you work 10 hours in a day, the last 2 hours are paid at 1.5x, even if your total weekly hours stay under 40.

California also requires double time (2x) for hours beyond 12 in a single day and for all hours worked on a seventh consecutive day in a workweek beyond 8 hours. These are specific to California and a few other states. The FLSA does not require daily overtime or double time.

Nevada, Alaska, and some other states have their own daily overtime requirements. If you work across state lines, the rules of the state where the work occurs typically apply.

Employers cannot average overtime across workweeks to avoid paying it. If you work 50 hours one week and 30 the next, you are owed 10 hours of overtime for the 50-hour week. The 30-hour week does not offset it. Each workweek stands alone under the FLSA.

Employers also cannot pay overtime in comp time (extra time off) in lieu of cash for private-sector employees. Only certain state and local government employers can offer comp time in place of overtime pay, and only under specific conditions. Private-sector workers are entitled to cash payment.

Misclassifying hourly employees as salaried exempt to avoid overtime obligations is an FLSA violation. If you believe you are owed overtime that was not paid, the Department of Labor's Wage and Hour Division handles FLSA complaints.

Consistent overtime can significantly change your annual income, which matters for budgeting, taxes, and comparing job offers. A $20/hr job with regular 10-hour overtime weeks generates substantially more than a $20/hr job at exactly 40 hours.

Keep in mind that overtime income is taxed the same as regular income. It does not face a higher tax rate. It just adds to your total annual income, potentially pushing more of your earnings into a higher marginal bracket. The Overtime Pay Calculator accounts for both the gross amount and can help you understand the full picture.