Overtime pay is premium pay for hours beyond a threshold, and the federal baseline in the United States is the Fair Labor Standards Act, FLSA: nonexempt employees earn at least one and a half times their regular rate for hours worked over 40 in a single workweek. That sentence contains four traps: nonexempt, regular rate, over 40, and workweek, and each one changes the answer. Some states add daily overtime, some contracts add double time, and some employers add tiers of their own. This guide works the federal baseline first, then the additions, with numbers throughout. Tax treatment of overtime is a separate subject, covered in the companion guide on the overtime deduction.

The FLSA baseline: 40 hours, one workweek

A workweek is a fixed 168-hour period, seven consecutive 24-hour days, set by the employer, and it does not need to match the calendar week or the pay period. Hours are counted within one workweek only: 50 hours one week and 30 the next do not average to 40 and 40, and the 10 overtime hours in the first week are owed even though the two-week total is 80. Averaging across weeks is permitted only under specific exemptions and agreements, not as a general employer choice.

The threshold is hours worked, not hours paid. Paid holidays, sick leave, and vacation generally do not count toward the 40, unless a contract or policy says otherwise, which is why a week with a paid holiday can contain 40 hours of work plus 8 hours of holiday pay and still owe no overtime, while a week with 41 hours of actual work owes one hour at time and a half.

The regular rate: higher than the base wage

The regular rate is total straight-time earnings in the workweek divided by total hours worked, and it includes most nondiscretionary bonuses, shift differentials, commissions, and piece-rate earnings, not just the hourly wage. An employee earning $20 an hour who also receives a $100 weekly production bonus and works 50 hours has straight-time earnings of $1,000 in wages plus $100 in bonus, which is $1,100 over 50 hours, for a regular rate of $22, not $20. The overtime premium is half the regular rate, $11, times the 10 overtime hours, which is $110, on top of the $1,100, for a weekly total of $1,210.

That is higher than the naive calculation of 40 times $20 plus 10 times $30, which is $1,100 plus the $100 bonus handled separately, and the difference is the point: the bonus raises the rate on which the premium is figured. Discretionary bonuses announced and decided after the work, gifts, and certain payments are excluded, but the exclusions are narrow and fact-specific, so an employer that pays bonuses and computes overtime on the base wage alone is usually underpaying.

Worked examples: time and a half, then double time

Example one, plain time and a half: $20 an hour, 50 hours in the week, no bonuses. Regular pay is 40 times $20, which is $800. Overtime pay is 10 times $30, which is $300. Weekly total is $1,100.

Example two, a second tier: $20 an hour, 55 hours, with an employer policy paying double time past 50 hours. The first 40 hours pay $800. The next 10 hours at time and a half pay $300. The last 5 hours at double time, $40 an hour, pay $200. Weekly total is $1,300. Double time is not an FLSA requirement; it comes from state law in a few states for certain patterns, from collective bargaining agreements, or from employer policy, and the tier thresholds vary, so check the applicable rule rather than assuming double time starts at any particular hour.

Who is exempt, and who is not

The FLSA overtime requirement applies to nonexempt employees. Exempt employees, under the executive, administrative, professional, computer, and outside sales exemptions, among others, are not owed overtime regardless of hours, provided they meet both the duties tests and the salary tests for their exemption. Job titles do not decide exemption: a worker called a manager who spends most of the day doing the same work as hourly staff may still be nonexempt, and misclassification is one of the commonest wage violations.

Salaried status alone does not make a worker exempt either. A salaried nonexempt employee is owed overtime on the regular rate derived from the salary, and a fluctuating-workweek arrangement, where a fixed salary covers all hours with a half-time premium for overtime hours, is permitted only under strict conditions. If a paycheck looks short, the first questions are exemption status and regular rate, in that order.

State law, contracts, and comp time

Several states are more generous than the federal floor. California, for example, requires time and a half past 8 hours in a day and double time past 12 hours in a day, as well as time and a half past 40 in a week, and Alaska and Nevada have daily thresholds of their own. Where state and federal law differ, the more generous rule for the worker applies. Collective bargaining agreements can add their own tiers, holiday premiums, and weekend differentials on top of both.

Compensatory time off instead of overtime pay, comp time, is generally not permitted for private-sector nonexempt employees: the FLSA requires pay, and an offer of time off instead deserves a question to the state labor department before acceptance. Public-sector employers have a limited comp time regime under different rules, which does not transfer to private employment.

Frequently asked questions

How is overtime pay calculated?

At least one and a half times the regular rate for hours over 40 in a workweek for nonexempt employees. At $20 an hour and 50 hours, weekly pay is $800 plus $300, which is $1,100.

What is the regular rate?

Total straight-time earnings divided by total hours worked, including most bonuses, shift differentials, and commissions. It is usually higher than the base hourly wage.

When does double time apply?

Double time comes from state law, collective bargaining agreements, or employer policy, not from the FLSA. Thresholds vary; check the applicable rule for your state and contract.

Do paid holidays count toward the 40 hours?

Generally no, unless a contract or policy says otherwise. Overtime is based on hours actually worked, not hours paid.

Can my employer average hours across two weeks?

Generally no. Hours are counted within a single workweek, and averaging across weeks is permitted only under specific exemptions and agreements.

Can a private employer offer comp time instead of overtime pay?

Generally no for nonexempt private-sector employees: the FLSA requires overtime pay, and time off instead deserves a question to the state labor department.