How Overtime Pay Actually Works

Last updated: September 2026 · Written by Hugo Cardozo

The basic rule: time-and-a-half over 40 hours

Under the federal Fair Labor Standards Act (FLSA), most hourly, non-exempt employees in the US are entitled to at least 1.5 times their regular hourly rate for every hour worked beyond 40 in a single workweek. Some employers or union agreements pay a higher multiplier (2x for holidays or certain shifts, for example), but 1.5x is the federal floor.

A worked example

At $22/hour with 40 regular hours and 6 overtime hours at 1.5x: regular pay is $880 (40 × $22), overtime pay is $198 (6 × $22 × 1.5 = 6 × $33), for a weekly total of $1,078. Multiplied across 52 weeks, that's roughly $56,056 a year — though real paychecks vary week to week with actual hours worked.

Overtime is calculated weekly, not by pay period

A common mistake is averaging hours across a two-week pay period. If you work 30 hours one week and 50 the next, you're still owed overtime for the 10 hours over 40 in the second week — the two weeks are never averaged together, even if your paycheck itself covers both.

Salaried doesn't automatically mean exempt

Being paid a salary doesn't by itself remove overtime eligibility. Whether an employee is "exempt" from overtime depends on specific duties tests and a minimum salary threshold set by the Department of Labor, not simply on being paid a fixed rather than hourly wage. If you're salaried and regularly work well over 40 hours, it's worth confirming your exemption status directly rather than assuming.

Bonuses and shift differentials can change your "regular rate"

The rate overtime is calculated on — your "regular rate of pay" — can be higher than your stated hourly wage once certain non-discretionary bonuses or shift differentials are folded in, under FLSA rules. If your paycheck's overtime line looks lower than this calculator's estimate, that's usually the first thing to check with payroll.

Frequently asked questions

Do some states require a higher overtime rate than federal law?

Yes — a handful of states set their own overtime rules that can be more generous than the federal FLSA floor, including daily overtime after a certain number of hours in some cases. When state and federal rules differ, the employee generally gets whichever rule pays more.

Is overtime pay taxed differently than regular wages?

No — it's taxed the same as any other wage income. It can look like it's withheld at a higher rate in a single paycheck because that check has more total income in it, but your actual tax rate is based on total annual income, not which paycheck the money arrived in.

What counts toward the 40 hours that trigger overtime?

Generally only hours actually worked — paid time off, holidays, and sick days typically don't count toward the 40-hour threshold under federal rules, even though they're paid. Some employer policies or union agreements handle this differently, so check your specific plan if it matters to your paycheck.