Overtime Calculation
How Is Overtime Calculated Under the FLSA?
Overtime calculation determines pay for hours worked beyond 40 in a workweek. Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive at least 1.5 times their “regular rate” for those hours—a rate that must include more than just base hourly pay.
The most common overtime miscalculation isn’t the 1.5x multiplier—it’s the “regular rate” itself. Federal law requires the regular rate to include non-discretionary bonuses, shift differentials, and certain other compensation earned during the workweek, averaged across all hours worked. An employer calculating overtime using only base hourly pay—ignoring a non-discretionary bonus earned that week—is underpaying overtime even if the base-rate math looks correct.
Overtime is calculated strictly on a workweek basis, not a pay period basis—which matters most for semi-monthly payroll. Some states go further than federal law: California requires daily overtime (over 8 hours in a day) in addition to weekly overtime. Multi-state employers need to apply the more generous of federal or state rules for each employee’s work location.
Key Overtime Calculation Rules Under the FLSA
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Federal overtime rate: 1.5x the "regular rate" for hours over 40/week (FLSA).
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Regular rate must include non-discretionary bonuses and shift differentials, not just base pay.
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Calculated on a fixed workweek basis, not a pay period basis.
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Some states (e.g., California) require daily overtime in addition to weekly overtime.
Frequently Asked Questions
Does a bonus affect overtime pay?
Yes—non-discretionary bonuses must be factored into the “regular rate” used to calculate overtime.
Is overtime calculated per pay period or per week?
Per workweek—a fixed, recurring 7-day period—regardless of how pay periods are structured.
Do all states follow the same overtime rules as federal law?
No—some states, like California, require daily overtime in addition to the federal 40-hour weekly threshold.
Do salaried non-exempt employees receive overtime?
Yes—non-exempt status, not salary versus hourly pay, determines overtime eligibility, so a salaried non-exempt employee still earns 1.5x their regular rate for hours over 40.
Can employers give comp time instead of overtime pay?
Generally no—private-sector employers cannot substitute compensatory time off for overtime pay under federal law; that option is largely limited to public-sector employers.
Related terms: Job Classification: Exempt vs. Non-Exempt, Payroll Cycle / Pay Period, FLSA