How to Calculate Overtime Pay: A Step-by-Step Guide (2026)

Overtime pay errors are one of the most common — and costly — FLSA violations. A single miscalculation multiplied across a workforce can result in back wages, liquidated damages, and attorney fees. This guide walks through the federal overtime calculation step by step, using the formulas from 29 CFR §778.107–§778.110 and DOL Fact Sheet #23.

Need the number now? Use the free FLSA Overtime Calculator: enter the hourly rate, hours worked and any bonuses, and it shows the regular rate, the overtime pay and the weekly total — with the formula behind it.

Who Is Covered by Federal Overtime?

The Fair Labor Standards Act (FLSA) requires employers to pay non-exempt employees at least 1.5 times their regular rate for every hour worked over 40 in a workweek. Coverage applies to most private-sector employees and many government workers. Employees are exempt only if they meet both of these tests:

1. Salary basis test — paid a fixed salary of at least $684/week ($35,568/year). The 2024 DOL rule that would have raised this to $1,128/week was vacated in court and never took effect; see our 2026 salary threshold guide
2. Duties test — perform executive, administrative, professional, computer, or outside sales duties as defined in 29 CFR Part 541

Paying a salary alone does not exempt an employee. If in doubt, treat the employee as non-exempt.

Step 1: Define the Workweek (Overtime Is Weekly, Not per Pay Period)

The FLSA workweek is a fixed, regularly recurring 168-hour period (seven consecutive 24-hour days). You choose the start day — it can be Sunday, Monday, or any other day. Overtime is calculated per workweek, not per pay period. If you pay biweekly, you still must calculate overtime for each of the two workweeks separately.

Example: Workweek runs Monday–Sunday. An employee works 36 hours one week and 44 hours the next. No overtime is owed for week 1 (36 < 40). Four hours of overtime are owed for week 2 (44 − 40 = 4 OT hours). You cannot average the two weeks.

Step 2: Determine the Regular Rate

The regular rate is not simply the hourly rate on the offer letter. Under 29 CFR §778.108, it is the total remuneration for the workweek divided by total hours worked — and it must include most forms of additional compensation.

What Goes Into the Regular Rate

Non-discretionary means the employer announced or promised the bonus in advance, or employees had reason to expect it. Production bonuses, attendance bonuses, safety incentives, and shift differentials are almost always non-discretionary.

Regular Rate Formula

regular_rate = (hourly_rate × hours_worked + non-discretionary_bonuses) ÷ hours_worked

Example with bonus: Employee earns $18/hr, works 46 hours, and receives a $92 production bonus that week.

regular_rate = ($18 × 46 + $92) ÷ 46 = ($828 + $92) ÷ 46 = $920 ÷ 46 = $20.00/hr

The bonus lifted the regular rate from $18 to $20 — and the overtime premium must be based on $20, not $18.

Step 3: Calculate Overtime Pay

Once you have the regular rate:

overtime_hours = hours_worked − 40  (minimum zero)
overtime_pay   = regular_rate × 1.5 × overtime_hours
regular_pay    = regular_rate × min(hours_worked, 40)
total_weekly   = regular_pay + overtime_pay

Continuing the example above:

• Regular pay: $20.00 × 40 = $800.00
• Overtime hours: 46 − 40 = 6
• Overtime pay: $20.00 × 1.5 × 6 = $180.00
• Total weekly pay: $800.00 + $180.00 = $980.00

Note: the $92 bonus is already embedded in the regular rate. Do not add it separately — it was included when we computed the regular rate.

Double Time: When It Applies and How to Calculate It

The FLSA never requires double time. Federal law only requires 1.5× the regular rate for hours over 40 in a workweek. Double time is owed when a state law, union contract or company policy requires it — for example, California requires 2× the regular rate for hours over 12 in a workday and for hours over 8 on the seventh consecutive workday (Labor Code §510).

double_time_pay = regular_rate × 2 × double_time_hours

Example: A California employee with a $20.00/hr regular rate works 14 hours in one day. Hours 9–12 are paid at 1.5× ($20 × 1.5 × 4 = $120) and hours 13–14 at 2× ($20 × 2 × 2 = $80). Our California Overtime Calculator applies these daily rules automatically.

For the federal overtime tax deduction, only the FLSA-required half-time premium counts — even when the employee was paid double time.

What "Premium Rate Factor 1.5 / 1.0" Means on a Pay Stub

Many payroll systems print a multiplier, or factor, next to each earnings line. It tells you how many times the base rate that line was paid at:

Seeing overtime hours split into a 1.0 line and a 0.5 line is normal: together they equal 1.5×. What matters for compliance is that the factor is applied to the regular rate (including non-discretionary bonuses), not just the base hourly rate.

What Are the Most Common Overtime Calculation Mistakes?

Mistake 1: Calculating overtime on the base rate, ignoring bonuses. If an employee earns a $200 production bonus in a week with overtime, the bonus must be spread across all hours to determine the true regular rate, which then increases the OT premium.

Mistake 2: Averaging hours across workweeks. You cannot combine a 36-hour week and a 44-hour week and say "no overtime because the average is 40." Overtime is per workweek.

Mistake 3: Assuming salaried employees are exempt. Salary is just one factor. The duties test must also be met. Many salaried workers — including some managers, technicians, and office workers — are non-exempt.

Mistake 4: Forgetting state rules. California requires 1.5x after 8 hours in a single day (and 2x after 12 hours). Alaska, Nevada, and Colorado also have daily overtime rules. Always apply the higher of federal and state requirements.

Using the HRCalcs Overtime Calculator

Our FLSA Overtime Calculator handles these calculations automatically. Enter the hourly rate, hours worked, and any non-discretionary bonuses — it computes the regular rate, overtime premium, and total weekly pay based on the formulas above. Select your state to get a flag if daily overtime rules apply.

Sources

• U.S. DOL — Fact Sheet #23: Overtime Pay Requirements of the FLSA
• 29 CFR §778.107 — General standard for overtime pay
• 29 CFR §778.108 — The regular rate defined
• 29 CFR §778.208–§778.210 — Bonuses in the regular rate