FLSA Overtime Pay Rules: Calculation Methods, Exemptions & Legal Standards
The Fair Labor Standards Act (FLSA) generally requires covered, non-exempt employees to receive overtime after 40 hours worked in a workweek. The regular rate can include shift premiums and non-discretionary bonuses, not just base hourly pay.
The federal 40-hour workweek standard
Under Section 7(a) of the FLSA, covered non-exempt employees must receive overtime pay for all hours worked exceeding 40 hours in a single designated workweek at a rate of at least one and one-half times their regular rate of pay.
The rules that define a workweek:
- The workweek is fixed: A workweek is a regularly recurring period of 168 hours—seven consecutive 24-hour periods. It can begin on any day of the week and at any hour, but once established, it cannot be arbitrarily changed to avoid overtime obligations.
- No averaging across weeks: Overtime is calculated on a single-workweek basis. An employer cannot average 30 hours in week one and 50 hours in week two across a biweekly pay period to claim 80 total hours with zero overtime. In this scenario, week two requires 10 hours of overtime pay.
- Adult working hours: The FLSA generally does not cap weekly hours for workers age 16 or older. Other laws, safety rules, or contracts may apply.
Calculating the "regular rate of pay"
An overtime calculation can be wrong if it assumes the overtime rate is simply 1.5 times the base hourly wage. Under FLSA regulations (29 CFR Part 778), overtime must be calculated on the regular rate of pay, which includes all remuneration paid to the employee, with narrow exceptions.
| Included in Regular Rate (Must Boost Overtime) | Excluded from Regular Rate (Statutory Exclusions) |
|---|---|
| Base hourly wages & salaries | Gifts and genuinely discretionary bonuses that meet the legal exclusions |
| Non-discretionary performance/production bonuses | Irrevocable employer contributions to 401(k)/pensions |
| Shift differentials (night, weekend, swing shifts) | Reimbursed business travel expenses (mileage, hotels) |
| Hazard pay & on-call compensation | Paid time off when no work was performed (PTO, sick) |
| Sales commissions & piece-rate pay | Qualifying premium portions of weekend or holiday pay (conditions apply) |
Formula for the regular rate of pay:
Regular Rate = Total Non-Excludable Earnings in Workweek ÷ Total Hours WorkedOvertime Premium = Regular Rate × 0.5 × Overtime HoursTotal Weekly Pay = Total Non-Excludable Earnings + Overtime Premium
Worked examples
Scenario A: base pay with shift differential
An employee earns $22.00/hour base pay plus a $3.00/hour night shift differential for working the second shift. During the week, they work 48 hours on the night shift:
- Effective regular rate: $22.00 + $3.00 = $25.00/hour.
- Straight time for 48 hours: 48 × $25.00 = $1,200.00.
- Overtime premium for 8 hours: 8 × ($25.00 × 0.5) = $100.00.
- Total gross pay: $1,300.00 (equivalent to 40 × $25 + 8 × $37.50).
To check this example, enter $22 for 48 hours, a $3 differential on all 48 hours, and zero for the second rate and bonus in the weighted overtime calculator. It includes the differential when calculating the regular rate and half-time premium.
Scenario B: hourly wage with a non-discretionary attendance bonus
An employee earns $20.00/hour and works 50 hours in a week. They also earn a $100.00 non-discretionary attendance bonus:
- Straight-time hourly pay: 50 hrs × $20.00 = $1,000.00.
- Total compensation before overtime: $1,000.00 + $100.00 bonus = $1,100.00.
- True regular rate: $1,100.00 ÷ 50 hours = $22.00/hour (not $20.00!).
- Overtime premium: 10 overtime hours × ($22.00 × 0.5) = $110.00.
- Total gross pay: $1,100.00 + $110.00 = $1,210.00.
If the employer had improperly used the $20.00 base rate, the employee would have received only $1,200.00—underpaying the worker by $10.00.
State-specific overtime variations
While federal law sets the baseline, several states enforce more protective daily overtime thresholds:
- California: Daily overtime (1.5x) is required for hours worked past 8 in a single workday, and past 40 in a workweek. Hours worked past 12 in a single day require double time (2.0x). Work on the 7th consecutive day also triggers overtime premiums.
- Nevada: Daily overtime applies to employees earning less than 1.5 times the state minimum wage who work more than 8 hours in a 24-hour period.
- Alaska: Requires overtime pay for hours worked beyond 8 in a single day or 40 in a workweek.
- Colorado: Requires overtime after 12 hours in a workday, 12 consecutive hours, or 40 hours in a workweek.
Exempt vs. non-exempt classifications
To be exempt from overtime under the FLSA's white-collar exemptions (Executive, Administrative, Professional), an employee must satisfy three tests:
- Salary basis test: The employee must be paid a predetermined, fixed salary that cannot be reduced based on the quality or quantity of work.
- Salary level test: The salary must meet the federal minimum weekly threshold.
- Job duties test: The employee's actual job duties—not their job title—must primarily involve executive management, administrative business operations, or specialized professional knowledge requiring advanced degrees.
Job titles like "Assistant Manager" or "Lead Associate" do not make an employee exempt if their primary duties involve manual labor, customer service, or routine operational tasks.
Calculate your overtime earnings accurately with our Overtime Pay Calculator.