Overtime Pay Rules: How the FLSA Calculates Time-and-a-Half

Almost everything about overtime pay in the United States traces back to one federal law: the Fair Labor Standards Act (FLSA). It sets the basic rule — time-and-a-half after 40 hours — and defines the terms employers must use when they calculate it. Yet overtime is also one of the most commonly miscalculated parts of a paycheck, because the details matter: what counts toward the 40 hours, what has to be included in your rate, and whether you are legally entitled to overtime at all. This guide covers the rules in plain terms.

The core rule: time-and-a-half after 40 hours in a workweek

If you are a non-exempt employee, your employer must pay you at least 1.5 times your regular rate for every hour you work beyond 40 in a single workweek. Three features of that sentence deserve attention:

Workweek, not day. The federal trigger is weekly. Working 10 hours in one day does not create federal overtime if your week totals 40 hours or fewer (some states add daily rules — see below).
Workweek, not pay period. A biweekly pay period is two separate workweeks. Working 45 hours one week and 35 the next does not average out to 40 and 40; the first week contains 5 overtime hours.
A workweek is fixed. It is a recurring block of 7 consecutive 24-hour periods — 168 hours — that your employer sets. It does not have to start on Monday, but it cannot be shifted around to dodge overtime.

The "regular rate" includes more than your hourly wage

Overtime is 1.5 times your regular rate, and the regular rate is a legal calculation, not simply the hourly number on your offer letter. In general, the regular rate is your total pay for the week (with limited exclusions) divided by the total hours you actually worked. Payments that must be included include:

Nondiscretionary bonuses — bonuses promised to encourage performance, attendance, or production, such as a bonus for hitting a target or completing a program;
Shift differentials — extra pay for night, weekend, or undesirable shifts;
Most other premiums and allowances paid for the work itself.

Because these payments sit inside the regular rate, a bonus can raise the overtime rate for every week the bonus covers. This is the single most common source of underpaid overtime: the employer calculates time-and-a-half from the base hourly wage and forgets the bonus or differential that should have lifted the rate first.

A worked example

Take an employee paid $20 an hour who works 45 hours in one workweek, with no bonuses or differentials:

Straight time for all 45 hours: 45 × $20 = $900 — or, split the common way, 40 × $20 = $800 for the regular hours.
Overtime premium hours: 45 − 40 = 5 hours at 1.5 × $20 = $30, so 5 × $30 = $150.
Gross pay: $800 + $150 = $950 for the week.

Both methods agree: whether you pay the overtime hours fully at the premium rate, or pay all hours at the regular rate plus an extra half-rate premium for the 5 overtime hours ($900 + 5 × $10 = $950), the law's target is the same $950. If a nondiscretionary bonus applied to that week, the regular rate — and therefore the $950 — would be higher.

Exempt vs. non-exempt: who is entitled to overtime

The FLSA splits employees into non-exempt (entitled to overtime) and exempt (not entitled). Job titles do not decide this — duties and pay structure do. The most common exemptions are the "white collar" ones for executive, administrative, and professional employees. In general, an exempt employee must:

Be paid on a salary basis — a predetermined amount not reduced based on the quantity or quality of work; and
Earn at least $684 per week (equivalent to $35,568 per year); and
Pass a duties test specific to the exemption — for example, an executive's primary duty must be managing the business or a department, directing the work of at least two other employees, with genuine input into hiring and firing; an administrative employee's primary duty must be office or non-manual work related to management or general business operations, exercising discretion and independent judgment on significant matters; a learned professional's work must require advanced knowledge in a field of science or learning.

Being paid a salary does not by itself make you exempt. A salaried employee who earns under the threshold, or whose duties do not meet the tests, is still owed overtime. Conversely, most hourly employees are non-exempt by default. Misclassification — treating someone as exempt when they are not — is a frequent and costly employer error.

Double time is not federal law

The FLSA never requires double time (2× pay). Nothing in federal law mandates it for nights, weekends, or holidays either. When workers receive double time, it comes from an employer's own policy, a collective bargaining agreement, or a specific state rule — a matter of contract, not the FLSA. The same is true of premium pay for working a holiday: welcome when offered, but not federally owed.

State daily-overtime rules

Federal law is a floor, not the whole structure. Some states add daily overtime on top of the weekly rule. California and Alaska are the best-known examples: in general terms, both provide for overtime rates after 8 hours worked in a single day, with higher premium treatment for very long days, in addition to the weekly threshold. Other states have narrower daily or seventh-day rules for particular industries. Where state and federal law differ, the rule more favorable to the employee generally applies, so it is worth checking your own state's labor department guidance rather than assuming the federal 40-hour test is the only one.

Recordkeeping and spotting errors

Employers are required to keep records of hours worked and wages paid for non-exempt employees, and your pay stub is the practical way to check their work. When you review an overtime week, verify: the hours shown match the hours you actually worked; the regular rate used reflects any bonus or differential owed for that week; overtime hours are priced at no less than 1.5 times that rate; and the week was not averaged against a lighter week in the same pay period. If the math looks wrong, raise it with payroll first — many errors are genuine payroll-system mistakes and are corrected on the next run — and keep your stubs and your own record of hours.

Key takeaways

Federal overtime is 1.5× your regular rate for hours over 40 in a single workweek — never averaged across a pay period.
The regular rate includes nondiscretionary bonuses and shift differentials, not just your base hourly wage.
Exemption depends on salary basis, at least $684 per week, and a duties test — a salary or a manager title alone is not enough.
Double time is never required by federal law; it exists only by policy, contract, or state rule.
Some states, notably California and Alaska, add daily overtime after 8 hours in a day.

Run your own numbers with our Overtime Pay Calculator. If you earn overtime regularly, you may also qualify for the temporary federal deduction on the premium portion — see our guide to the no-tax-on-overtime deduction.

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Last updated: 2026-10-31. Tax parameters: 2026 (IRS Rev. Proc. 2025-32; SSA wage base; Tax Foundation state tables).

Estimate only — not tax advice. NetPayLabs provides general educational estimates using 2026 federal and state tax parameters, the standard deduction, and simplified state rules. Your actual withholding and tax depend on your W-4, pre-tax deductions (401(k), health premiums), credits, local taxes and your full return. Consult a qualified tax professional for advice about your situation.