An HR Glossary for HR Terms

Glossary of Human Resources Management and Employee Benefit Terms


What Is Overtime?

Overtime is pay given to employees earning less than $35,568 annually when they work more than 40 hours in a workweek, meaning seven consecutive 24-hour periods.

Some states require employers to pay for overtime when employees work more than eight hours in a day or 24-hour period.

How Much Is Overtime Pay?

The Fair Labor Standards Act (FLSA) requires employers to pay an overtime rate of at least 1.5 times their regular daily or hourly rate (an additional 50% or time and a half). Some employers may choose to use a higher rate. For example, they might:

Overtime pay is paid on the employee’s regular payday for their regular pay period.

Who Is Exempt from Overtime Pay?

The US Department of Labor Wage and Hour Division classifies the following employees as exempt from overtime pay if they earn more than $35,568 per year on a salary basis:

What Is Considered Overtime?

A non-exempt employee must work over 40 hours in one workweek to qualify for overtime, along with a few other conditions:

What Is Not Considered Overtime?

Overtime pay is not required for regular work hours performed on:

The only time overtime is given on these days is when it pushes an employee’s hours past 40 hours per week. Some employers may choose to pay a higher overtime rate when employees work extra hours on these days.

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Mandatory overtime is legal by federal law if:

How Does Overtime Pay Work?

In the US, overtime pay works by compensating certain types of employees for working longer hours. For employers, that means first determining whether your employees qualify for overtime and then making sure you pay them accordingly.

Here are the steps to follow:

Step 1: Determine Whether Your Company Must Pay Overtime

Generally, you’re required to pay overtime if you meet all of the following conditions:

Your employees are entitled to overtime pay if they are:

Step 2: Calculate Time-and-a-Half Pay

As part of your payroll process, you'll need to review employee timesheets and adjust their pay to reflect any overtime they've earned. For more information, see “How Do I Calculate Overtime?” below.

Step 3: Maintain Accurate Records

As you run payroll, be sure to always include overtime pay on your employees’ paycheck. Keep records of all of your overtime payments to your employees to prove that you meet all FLSA requirements.

How Do I Calculate Overtime?

There are ways to calculate overtime pay for both non-exempt and exempt employees.

3 Steps to Calculate Overtime for Non-Exempt Employees

To calculate overtime for non-exempt employees:

  1. Multiply the employee’s regular hourly pay rate by 1.5 (the time-and-a-half rate).
  2. Multiply that total by the extra hours worked (over 40 hours). This will equal the amount of overtime pay the employee has earned.
  3. Add the overtime total pay rate to the employee’s regular 40-hour workweek pay for their new total pay.

Example: Non-Exempt Employee Overtime

Ernie normally earns $15 an hour for a 40-hour workweek—totaling a $600 paycheck. Last week, Ernie worked an additional 5 hours—totaling a 45-hour workweek.

  1. $15.00 an hour x 1.5 = $22.50 an hour overtime pay rate
  2. $22.50 x 5 hours of overtime = $112.50 of total overtime pay
  3. $600 regular pay + $112.50 overtime pay = $712.50 total workweek pay

2 Ways to Calculate Overtime for Exempt Employees

To calculate overtime pay for exempt employees:

Understanding how overtime works and how to calculate it ensures you’re following FLSA rules, plus it helps your employees trust your organization.

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