Overtime Pay
Additional compensation for hours worked beyond 40 per week.
Under the Fair Labor Standards Act (FLSA), non-exempt employees must be paid at least 1.5 times their regular rate for hours worked beyond 40 in a workweek. Some states have additional overtime rules, including daily overtime thresholds. Overtime is calculated weekly regardless of pay period, and employers cannot "average" hours across two weeks to avoid overtime obligations.
Formula
Overtime Pay = Overtime Hours × (Regular Hourly Rate × 1.5)Example
A non-exempt employee earning $20/hour works 48 hours in a week—they receive $800 for the first 40 hours and $240 for 8 overtime hours at $30/hour (1.5× rate), totaling $1,040.
Why It Matters for Your Business
Overtime violations are among the most common wage-and-hour claims, and penalties include back pay, liquidated damages, and attorney fees.
Practical Tips
- •Track employee hours carefully to identify overtime before it becomes excessive.
- •Ensure employees are correctly classified as exempt or non-exempt to avoid misclassification liability.
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