How to Calculate Overtime Pay (With Examples)

Overtime pay is where small timesheet errors turn into real money and, sometimes, legal trouble. The core idea is simple — hours past a threshold are paid at a higher rate — but the details of which hours count and what rate applies are where mistakes happen. This guide breaks the calculation into clear steps with examples. It's general guidance, not legal advice, and the exact rules depend on where you and your employees are.

Step 1: Know the overtime threshold

In the United States, the federal standard (the Fair Labor Standards Act) sets overtime at hours worked over 40 in a single workweek, paid at no less than 1.5 times the regular rate. A workweek is a fixed, recurring 168-hour period — it doesn't have to be Monday to Sunday, but it has to be consistent.

Two things people get wrong:

• Overtime is weekly, not per pay period. Someone who works 45 hours one week and 35 the next has 5 overtime hours, even though the two-week total is 80.
• Some states add daily overtime. In California, for example, hours over 8 in a day can trigger overtime regardless of the weekly total. Always check your state or country's rules.

Step 2: Find the regular rate of pay

The overtime multiplier applies to the regular rate, which isn't always just the base hourly wage. For a straightforward hourly employee, the regular rate is their hourly wage. But if they earn nondiscretionary bonuses or shift differentials, those may need to be folded in, which raises the regular rate. For a simple case, if someone earns $20/hour, their regular rate is $20.

Step 3: Calculate the overtime rate

Multiply the regular rate by 1.5 (time-and-a-half):

$20 × 1.5 = $30 per overtime hour

Some employers or contracts pay double time (2×) for certain hours, such as holidays or hours past a second daily threshold. Use whatever multiplier applies, but never less than the legal minimum.

Step 4: Split regular and overtime hours

Take the weekly total and separate it at the threshold. Say an employee worked 46 hours in one week:

• Regular: 40 hours
• Overtime: 6 hours

Step 5: Add it up

Now combine the two pay components:

• Regular pay: 40 × $20 = $800
• Overtime pay: 6 × $30 = $180
• Total: $980

Compare that to paying all 46 hours at the straight rate ($920). The 6 overtime hours cost an extra $60 — the "half" in time-and-a-half. Miss it, and that's unpaid overtime.

A second example: a bigger week

An employee earns $18/hour and works 52 hours in a week.

• Regular rate: $18; overtime rate: $18 × 1.5 = $27
• Regular: 40 × $18 = $720
• Overtime: 12 × $27 = $324
• Total: $1,044

Common overtime mistakes

• Averaging two weeks together to stay under 40 — overtime is calculated per week.
• Forgetting bonuses that should raise the regular rate.
• Misclassifying employees. "Salaried" doesn't automatically mean "exempt from overtime." Exemption depends on duties and salary level, not just how someone is paid.
• Not counting all hours worked — pre-shift setup, required training, and some travel time can count.
• Rounding overtime away with inconsistent timesheet rounding.

Let your timesheets flag overtime automatically

The reliable way to get overtime right is to total each workweek separately and split at the threshold every time. Timesheet Maker does this for you — it tracks hours by workweek, separates regular from overtime based on your rules, and shows the split before payroll runs, so overtime is never missed or double-counted.

Frequently asked questions

How is overtime pay calculated? Find the regular rate, multiply by 1.5 for the overtime rate, then pay that rate for hours over the weekly threshold (40 in a standard US workweek). Regular hours are paid at the normal rate.

Is overtime based on the week or the pay period? The workweek. Each week stands on its own, so a biweekly total can hide overtime owed in one of the two weeks.

Do salaried employees get overtime? Sometimes. Whether someone is exempt depends on their duties and salary level, not simply on being salaried. Check the rules that apply to you.

What's the difference between time-and-a-half and double time? Time-and-a-half is 1.5× the regular rate; double time is 2×. Double time usually applies only where a contract or specific state law requires it.

Get overtime right every run

Know your threshold, find the regular rate, apply the multiplier, and split hours by week. When you'd rather not track thresholds by hand, try Timesheet Maker free and let it flag overtime for you.