Overtime pay violations cost workers millions annually. In FY 2024, the U.S. Department of Labor’s Wage and Hour Division recovered more than $273 million in back wages and damages for nearly 152,000 workers nationwide – with a large share tied to FLSA overtime violations. An even larger amount was recovered by private law firms representing workers in class and collective action lawsuits. Understanding how to calculate overtime correctly ensures you receive every dollar earned. This guide explains overtime calculations, time-and-a-half requirements, and common mistakes that lead to underpayment.
If you’re concerned that you’re not receiving the correct overtime pay rate, it’s time to take action. The Lore Law Firm is here to support your rights and ensure you get what you deserve. Don’t hesitate to contact us for guidance or call us at 1-800-559-0400 to discuss your situation. Let’s work together to secure your financial future.
What Is Overtime Pay under Federal Law?
Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive overtime pay for all hours worked over 40 in a workweek at 1.5 times their regular rate. This “time-and-a-half” is a legal minimum. For example, if your regular pay is $20/hour, your overtime rate is $30/hour for each hour beyond 40.
Key principle: Overtime is calculated on a workweek basis-a fixed period of 168 consecutive hours. Hours cannot be averaged across weeks. If you work 50 hours one week and 30 the next, you’re entitled to 10 hours of overtime for the first week, even though the two-week average is 40.
Who Is Eligible for Overtime Pay?
The FLSA distinguishes between non-exempt (eligible for overtime) and exempt (not eligible) employees.
Salary Level: To be exempt, employees must earn at least $684/week ($35,568/year. Those earning less are typically non-exempt regardless of job duties. For most white-collar exemptions (executive, administrative, professional), employees must be paid on a salary basis of at least $684/week; however, the salary threshold does not apply to outside sales, teachers, lawyers, or doctors, and certain computer employees may qualify if paid at least $27.63 per hour.
Job Duties: Salary alone isn’t enough. To be exempt, your primary duties must involve:
● Executive work (managing others)
● Administrative work (office/non-manual work requiring discretion)
● Professional work (requiring advanced knowledge)
● Outside sales
● Certain computer-related work
Salary Basis: Exempt employees must receive a fixed salary not subject to reduction based on work quality or quantity. If your pay is docked for partial-day absences, you might be treated as hourly, affecting exemption status.
Remember: Job titles don’t determine exemption-actual duties do. Being told “you’re salaried, so no overtime” isn’t always correct if the criteria aren’t met.
Understanding Your “Regular Rate of Pay”
The “regular rate” is your average hourly pay for the workweek, including all remuneration except certain exclusions. This rate forms the basis for overtime calculations.
What’s Included:
● Base hourly wage
● Nondiscretionary bonuses (performance, attendance)
● Commissions
● Shift differentials
● Piece-rate earnings
What’s Excluded:
● Discretionary bonuses (gifts, holiday bonuses)
● Payments for non-working time (vacation, sick pay)
● Reimbursements
● Premium pay already paid for overtime hours
Why It Matters: Employers who calculate overtime based only on base wages while ignoring bonuses, shift differentials or commissions are underpaying and violating the law.
Calculating Overtime for Hourly Workers
For single-rate hourly employees:
- Count total hours worked in the workweek
- Calculate regular pay for first 40 hours (40 × hourly rate)
- Determine overtime rate (regular rate × 1.5)
- Calculate overtime pay (overtime hours × overtime rate)
- Add regular and overtime pay for total weekly pay
Example: 45 hours at $20/hour
● Regular pay: 40 × $20 = $800
● Overtime rate: $20 × 1.5 = $30
● Overtime pay: 5 × $30 = $150
● Total: $800 + $150 = $950
If you earned bonuses, add them to regular pay before calculating the hourly rate. For instance, a $50 bonus on $800 regular pay = $850 total ÷ 40 hours = $21.25 regular rate, making overtime $31.88/hour. Include nondiscretionary bonuses in total weekly pay and divide by all hours worked to find the regular rate; if a bonus covers multiple weeks, allocate it to those weeks and pay any additional 0.5× overtime premium for overtime hours in each covered week.
Calculating Overtime for Salaried Non-Exempt Employees
Being salaried doesn’t automatically exempt you from overtime if you don’t meet exemption criteria.
Steps:
- Determine weekly salary and hours it covers
- Calculate regular hourly rate (salary ÷ covered hours)
- Apply overtime rate (regular rate × 1.5) to hours over 40
- Add overtime to base salary
Example: $800/week salary covering 40 hours, 45 hours worked
● Regular rate: $800 ÷ 40 = $20/hour
● Overtime: 5 hours × $30 = $150
● Total pay: $800 + $150 = $950
Other Pay Structures
Multiple Rates: Use weighted average of all rates. Add all earnings and divide by total hours for regular rate.
Day Rate: Add all day-rate pay for the week, divide by total hours for regular rate. You get additional half-time (0.5×) for overtime hours since day rate already covers straight time.
Piece Rate/Commission: Total weekly earnings ÷ total hours = regular rate. Overtime premium is 0.5× regular rate × overtime hours (since piece rate covers straight time).
Fluctuating Workweek: A special method where fixed salary covers all hours worked, with only half-time paid for overtime. Requires clear agreement and strict conditions.
Common Overtime Mistakes
- Excluding bonuses/commissions from regular rate calculations
- Misclassifying employees as exempt based on title alone
- Ignoring off-the-clock work (pre/post-shift duties)
- Averaging hours across multiple weeks
- Substituting comp time for overtime pay (illegal in most private sector jobs, only public agencies may use comp time under strict 29 U.S.C. § 207(o) rules)
- Improper fluctuating workweek implementation
Each workweek stands alone – no averaging. All work time counts, including short breaks and prep time. Private sector employers must pay overtime in wages, not future time off.
Getting Help
If you suspect incorrect overtime pay:
- Document your hours and pay
- Calculate what you should receive
- Discuss with employer/HR
- If unresolved, consult with an employment law attorney who handles overtime cases
The law protects against retaliation for claiming overtime. In successful cases, employers may have to pay attorney fees and possibly double damages.
Frequently Asked Questions
Q: How do I know if I’m entitled to overtime?
A: If you’re non-exempt (earning a salary under $684/week or lacking exempt job duties), you get overtime for hours over 40/week. Most hourly workers are non-exempt.
Q: What is “time-and-a-half”?
A: It’s 1.5× your regular rate, including base pay plus commissions, shift differentials and nondiscretionary bonuses-150% of your all-in regular rate.
Q: Is overtime calculated daily or weekly?
A: Federal law requires weekly overtime (over 40 hours/week). Some states like California also require daily overtime (over 8 hours/day). The more favorable law applies.
Q: Do bonuses affect overtime?
A: Yes, nondiscretionary bonuses tied to performance must be included in regular rate calculations, increasing your overtime rate that week.
Q: Can my employer give comp time instead of overtime pay?
A: No, in the private sector comp time may not replace overtime. Overtime must be paid in cash on the regular payday for the pay period in which it was worked (or as soon as practicable if precise calculation isn’t possible.
Q: What if my overtime pay is wrong?
A: Talk to your employer first. If unresolved, file with the Department of Labor or consult an employment attorney. Many offer free consultations and work on a contingent fee basis.
Q: Can I be fired for claiming overtime?
A: No. Retaliation for claiming unpaid overtime is illegal and could lead to additional legal claims against the employer.
Getting Paid Fairly Moving Forward
Overtime law is straightforward: non-exempt employees get 1.5x their regular rate for hours over 40/week. The confusion comes in determining the regular rate and ensuring all hours are counted. Understanding these calculations helps ensure you’re paid fairly for your hard work.
If you’re concerned that you’re not receiving the correct overtime pay rate, it’s time to take action. The Lore Law Firm is here to support your rights and ensure you get what you deserve. Don’t hesitate to contact us for guidance or call us at 1-800-559-0400 to discuss your situation. Let’s work together to secure your financial future.
