You worked 46 hours this week. Your paycheck looks bigger, but is it right? Overtime pay has a specific legal formula in the United States, and both employees and small employers get it wrong more often than you would think. Understanding how overtime pay is calculated protects your wallet whether you are the one clocking the hours or the one running payroll.

This guide covers the federal formula, worked examples for hourly and salaried workers, the bonus wrinkle most people miss, and who is actually exempt. The math is simpler than the law around it.

The Federal Formula: Time and a Half After 40

Under the Fair Labor Standards Act, nonexempt employees must receive overtime pay for hours worked over 40 in a workweek, at a rate of at least 1.5 times their regular rate of pay. The U.S. Department of Labor states this plainly on its overtime pay resource page: time and one-half the regular rate, no averaging across weeks, and the workweek is a fixed 168-hour period.

The formula itself is short:

Overtime pay = regular hourly rate x 1.5 x overtime hours
Total pay = (40 x regular rate) + overtime pay

Worked example: you earn $20 an hour and work 44 hours. Regular pay is 40 x $20 = $800. Your overtime rate is $20 x 1.5 = $30 an hour. Four overtime hours give $120. Total: $920. That is the entire calculation. Everything else is edge cases.

Hourly Workers: The Straightforward Case

For a standard hourly employee, the steps are: confirm the regular rate, multiply the first 40 hours at that rate, then multiply the extra hours at 1.5 times the rate.

Take a $25-an-hour worker who puts in 50 hours. Base pay is $1,000. The overtime rate is $37.50, times 10 hours is $375. Total: $1,375. QuickBooks walks through this same calculation in its seven-step overtime guide, including the common employer mistakes like averaging hours across two weeks, which the law explicitly forbids.

The averaging trap deserves emphasis. If you work 45 hours one week and 35 the next, your employer cannot call it 80 hours and skip overtime. Each week stands alone. Five hours of overtime in week one must be paid as overtime, full stop.

Salaried Workers: The Case Everyone Gets Wrong

Here is the myth that costs people money: being salaried does not automatically make you exempt from overtime. Exempt status depends on your job duties and a salary threshold, not on the word "salary" in your offer letter.

The federal salary threshold for exemption is $684 per week, which is $35,568 a year. Below that, you are nonexempt regardless of title, and overtime applies. Above it, you must also fit one of the exemption categories: executive, administrative, professional, computer, or outside sales employees. Miss either test and you are owed overtime.

For a salaried nonexempt worker, the math starts by converting salary to an hourly rate. A $800-a-week salary divided by 40 hours gives a $20 regular rate. Work 45 hours and the overtime rate is $30, times 5 hours is $150, for a weekly total of $950. Note that some states set higher thresholds than the federal one, so always check your state's rules. Misclassification, treating a nonexempt worker as exempt, is one of the most common wage violations in the country.

If you are comparing offers, our salary versus hourly job offer guide breaks down the real tradeoffs, and the full salary-to-hourly formula when you want every step shown.

The Bonus Wrinkle: Your Rate Might Be Higher Than You Think

This is the detail almost nobody knows. If you earn nondiscretionary bonuses, things like production bonuses or attendance bonuses, they get folded into your regular rate before the 1.5 multiplier is applied.

Example: you earn $15 an hour, work 43 hours, and get a $50 weekly bonus. Total straight-time pay is $645 plus $50, which is $695. Divide by all 43 hours worked and your true regular rate is about $16.16, not $15. Overtime is then $16.16 x 1.5 x 3 hours, which is $72.72. An employer who calculated overtime on $15 flat would underpay you. Small numbers per week, real money over a year.

The honest tradeoff in all of this: the 40-hour week is the federal baseline, but daily-overtime states like California and Alaska play by different rules, and employer policies vary on top of that. The formula is national. The edges are local.

Disclaimer: this article explains general concepts and is not legal advice. Employment law varies by state and situation. Consult a qualified attorney or your state's labor department for guidance about your specific case.

Frequently Asked Questions

Who is exempt from overtime law?
Employees who meet both a salary threshold ($684/week federally) and a duties test in the executive, administrative, professional, computer, or outside sales categories. Some states set higher thresholds. Everyone else is nonexempt and owed overtime.

Does being salaried make an employee exempt?
No. Salary alone does not determine exemption. An employee must meet the salary threshold and the duties test. Many salaried workers are nonexempt and legally entitled to overtime pay.

Can a salaried employee still be non-exempt?
Yes, and it is common. A salaried worker earning below the threshold, or whose duties do not fit an exemption category, is nonexempt. Their overtime is calculated by dividing weekly salary by 40 to find the regular hourly rate first.

What is the minimum salary for exempt employees?
Federally, $684 per week ($35,568 per year) under the reinstated 2019 threshold. Several states require more. Check your state's labor department for the number that applies to you.

Do bonuses change the overtime rate?
Nondiscretionary bonuses, like production or attendance bonuses, must be included when calculating the regular rate, which raises the overtime rate. Discretionary bonuses, like surprise holiday gifts, generally do not.