Overtime Pay Calculation Guide

Overtime Pay Calculation

Overtime pay typically applies to non-exempt employees who work more than 40 hours per week. Understanding the calculation helps you evaluate the true value of overtime work.

Standard Overtime (1.5x)

Regular Rate: Base hourly rate
Overtime Rate: Base rate x 1.5

Example: $40/hr Base Rate

Hours Worked	Regular Pay	Overtime Pay	Total Weekly
40	$1,600	$0	$1,600
45	$1,600	$300	$1,900
50	$1,600	$600	$2,200
55	$1,600	$900	$2,500
60	$1,600	$1,200	$2,800

Annual Impact of Regular Overtime

If you consistently work 45 hours/week at $40/hr:

Regular annual:  40 x $40 x 52 = $83,200
Overtime annual:  5 x $60 x 52 = $15,600
Total annual:                     $98,800

That is 18.7% more than the standard 40-hour annual salary. Your effective hourly rate becomes $98,800 / (45 x 52) = $42.22/hr.

Double-Time Rules

Some states (notably California) require double-time pay for:

• Hours beyond 12 in a single day
• All hours on the 7th consecutive work day

Double-time rate: Base rate x 2.0
$40/hr base = $80/hr double time

Salaried Exempt vs Non-Exempt

In the US, exempt employees (typically earning above $35,568/year and performing professional duties) are not entitled to overtime. The Fair Labor Standards Act (FLSA) determines exemption status. If you are non-exempt and salaried, your overtime rate is calculated from your implied hourly rate:

Implied hourly = Annual salary / 2,080
Overtime rate = Implied hourly x 1.5

Tax Implications

Overtime pay is taxed at the same marginal rate as regular income. However, a large overtime check can push your withholding into a higher bracket, leading to temporarily larger deductions (these are usually refunded at tax time).