Overtime pay is additional compensation provided to employees for working more than the standard 40 hours per week. The calculation for overtime pay is typically one and a half times the regular hourly rate of pay.
In the United States, the Fair Labor Standards Act (FLSA) sets the guidelines for overtime pay. According to the FLSA, non-exempt employees must be paid at least the federal minimum wage for all hours worked, and they are entitled to overtime pay for any hours worked beyond 40 in a workweek.
The standard formula for calculating overtime pay is straightforward. If an employee’s regular hourly wage is $15, their overtime rate would be $22.50 per hour (1.5 times the regular rate) for each hour worked beyond 40 in a week.
For example, if an employee works 45 hours in a week at $15 per hour, the calculation would be as follows:
- 40 hours x $15 = $600 (regular pay)
- 5 hours x $22.50 = $112.50 (overtime pay)
- Total weekly pay = $600 + $112.50 = $712.50
It’s important to note that some states may have different overtime pay regulations. California, for instance, has daily overtime provisions where employees earn overtime for any hours worked beyond 8 in a day, in addition to the weekly 40-hour threshold.
Certain employees, known as exempt employees, are not eligible for overtime pay under the FLSA. Exempt employees typically include salaried professionals, executives, and administrative personnel.
Employers are required by law to maintain accurate records of hours worked and rates of pay. Failure to pay overtime when due can result in legal consequences.
