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How is overtime pay calculated?

This depends on whether the employee is paid by the hour or by a weekly, monthly, or annual salary.

• Payment by the hour
• Payment by salary
• What is a "workweek"?
• Filing a claim
  

Payment by the hour

If the employee is paid by the hour, the overtime rate is 1 ½ times the hourly rate. So an employee who is paid $8 per hour should get paid $12 per hour for every hour worked over 40 hours a week. An employee who gets $9 per hour should be paid $13.50 per hour for every hour worked over 40 hours a week.

Payment by salary

Calculating overtime rates can be more difficult if your employee is paid by salary.

First, figure out the employee's "regular rate of pay." Divide the employee's weekly salary by the number of hours worked in a week. The number you get will equal the employee's "regular rate of pay."

The employee should then be paid 1 ½ times that "regular rate" for every hour worked over forty hours a week.

For example, if the employee's weekly salary is $1,000 and usually works 40 hours a week, then the "regular rate of pay" is $25 per hour. 1 ½ times $25 is $37.50, so the employee should be paid an additional $37.50 for every hour worked over 40 hours.

What is a "workweek"?

A "workweek" is any seven days in a row that is set by you as the workweek. You can say that the workweek runs from Tuesday through the next Monday, or you can say that the workweek runs from Friday through the next Thursday. But you probably can't jiggle the scheduled "workweek" just to keep from paying employees overtime.

Most workweeks go from Sunday through Saturday, just like regular weeks. So, an employee who works more than 40 hours between 12 a.m. on Sunday and 11:59 p.m. the next Saturday should probably be paid overtime for all of the hours over 40 during that week.