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How to Calculate Overtime: A Comprehensive Guide
Understanding how to calculate overtime (OT) is essential for both employees wanting to verify their paychecks and employers ensuring compliance with labor laws. In most jurisdictions, overtime is calculated based on hours worked beyond a standard workweek, typically 40 hours.
The Standard Overtime Formula
Most workers are eligible for "time and a half" pay. This means for every hour worked over the standard limit, you earn your regular hourly rate multiplied by 1.5.
- Regular Pay = Regular Hourly Rate × Standard Hours
- Overtime Rate = Regular Hourly Rate × 1.5
- Overtime Pay = Overtime Rate × Overtime Hours
- Total Gross Pay = Regular Pay + Overtime Pay
Realistic Example of OT Calculation
Let's say you earn $20 per hour and worked 45 hours this week.
- Regular Pay: 40 hours × $20 = $800
- OT Rate: $20 × 1.5 = $30 per hour
- OT Hours: 45 – 40 = 5 hours
- OT Pay: 5 hours × $30 = $150
- Total Pay: $800 + $150 = $950
Common Overtime Multipliers
While 1.5x is the standard, different situations or contracts might require different multipliers:
| Type | Multiplier | Description |
|---|---|---|
| Standard OT | 1.5x | Standard hours over 40 in a week. |
| Double Time | 2.0x | Often used for holidays or Sunday shifts. |
| Triple Time | 3.0x | Rare, usually found in specific union contracts. |
Frequently Asked Questions
Does overtime apply to salaried employees?
It depends on whether the employee is "exempt" or "non-exempt" under the Fair Labor Standards Act (FLSA). Most hourly workers are non-exempt and must receive overtime.
What is the 8/80 rule?
In some healthcare industries, overtime is calculated for any hours worked over 8 in a day or 80 in a 14-day period, rather than the standard 40-hour week.