What is overtime pay?
Overtime pay is the additional compensation an employee earns for working hours beyond the standard threshold — typically more than 40 in a workweek under US federal law. The most common overtime rate is time and a half: 1.5 times the employee's regular rate of pay for each overtime hour. Overtime rules vary significantly by country — see the jurisdiction table below.
The Fair Labor Standards Act (FLSA), administered by the U.S. Department of Labor (DOL), sets the federal minimum overtime rules for most private and public sector workers in the United States. States and localities may set stricter overtime laws, but no jurisdiction may fall below the federal FLSA floor.
The overtime pay formula
- Regular pay: Regular hours × hourly rate
- OT pay (1.5×): OT hours × hourly rate × 1.5
- Double-time pay (2×): Double-time hours × hourly rate × 2
- Total overtime pay: OT pay + double-time pay combined
- Gross pay: Regular pay + total overtime pay
- Effective hourly rate: Gross pay ÷ total hours worked
What is time and a half?
Time and a half is the standard overtime pay rate, equal to 50% more than the employee's regular hourly pay rate. A worker earning $20 per hour has a time-and-a-half overtime rate of $30 per hour. For every hour of overtime work at this rate, the employee receives $10 more than their standard hourly pay.
This is the US federal minimum under the FLSA. Employers may voluntarily pay higher overtime multipliers (some collective bargaining agreements specify double time for weekend or holiday work), but 1.5× is the legally required floor for most non-exempt employees.
Federal overtime law: what the FLSA requires
Under the Fair Labor Standards Act, covered, non-exempt employees must receive overtime pay at no less than 1.5 times their regular rate of pay for all hours an employee works in excess of 40 in a single workweek.
A workweek is a fixed and regularly recurring period of 168 hours (seven consecutive 24-hour periods). It may begin on any day of the week, but it must be consistent and fixed. Employers cannot average hours across two or more workweeks to avoid overtime liability. Each workweek stands alone.
Exemptions from overtime
The FLSA provides overtime exemptions for executive, administrative, professional, computer, and outside sales employees who meet both a duties test and a minimum salary threshold. The exact threshold has been subject to legal challenges and changes — consult the DOL Fact Sheet #17A or a qualified employment attorney for the current figure.
Key points on eligibility and exemptions:
- Both the duties test and the salary test must be met; salary alone does not create an exemption
- Blue-collar and manual labor workers are almost never exempt regardless of pay level
- Police, firefighters, and healthcare workers have partial exemptions under specific FLSA provisions
- State laws may impose different or additional exemption criteria beyond the federal standard
Source: DOL Fact Sheet #17A — Overtime Exemptions Under the FLSA
Is overtime taxed differently?
The following applies to employees in the United States. Tax treatment of overtime varies by country — if you are outside the US, check with your local tax authority or a qualified tax professional for the rules that apply to you.
In the US, overtime pay is taxed as ordinary income, the same as regular wages. There is no special federal tax rate for overtime compensation. The overtime pay you receive is added to your total gross income for the pay period and taxed according to the applicable federal income tax brackets.
Disclaimer: The tax information on this page is for general educational purposes only. Tax rules are complex and change frequently. Whether you are an employee or a business owner, always consult a qualified tax advisor or accountant before making decisions based on tax information.
Overtime laws by jurisdiction
Overtime rules: US states and international
Overtime rules vary significantly by country and, within the US, by state. The table below covers major jurisdictions. Laws change. Always verify current rules with the relevant labor authority or a qualified employment lawyer in your jurisdiction, whether you are an employee or a business owner.
JurisdictionDaily OT thresholdWeekly OT thresholdCalifornia1.5× after 8h/day1.5× after 40h/weekAlaska1.5× after 8h/day1.5× after 40h/weekNevada1.5× after 8h/day (if wage < 1.5× state minimum wage)1.5× after 40h/weekCanada — federal1.5× after 8h/day1.5× after 40h/weekUKNo statutory daily OT rateNo statutory weekly OT rate
Laws change frequently. Always verify with the relevant authority: US DOL · Canada Labour Code · GOV.UK overtime rights · California Labor Code §510 · Alaska Stat. §23.10.060 · Nevada Rev. Stat. §608.018
Salaried non-exempt overtime
Many employers and employees mistakenly assume that salaried workers are automatically exempt from overtime. Salary level alone does not determine overtime eligibility — the duties test must also be met. The salary threshold for exemption has been subject to legal challenges; consult the DOL Fact Sheet #17A or a qualified employment attorney for the current figure. This applies to US workers — salaried employee overtime rules differ significantly by country.
For salaried non-exempt employees, the regular rate of pay is calculated by dividing the weekly salary by the total number of hours the salary is intended to cover. Overtime is then paid at 0.5× the regular rate as a premium — using the half-time method — because the straight-time portion of overtime hours is already covered by the salary.