Overtime Pay Guide

Under the federal Fair Labor Standards Act, covered nonexempt employees receive at least one and one-half times their regular rate for hours worked beyond 40 in a single workweek. A workweek stands on its own. Hours cannot be averaged across two weeks to avoid overtime.

State law can create a stronger rule, such as daily overtime, double time, or a different threshold. When more than one law applies, the worker receives the protection that produces the greater benefit.

For a worker paid one hourly rate with no extra compensation, the regular rate is that hourly rate. With other forms of pay, the federal regular rate is found by dividing eligible compensation for the workweek by the hours actually worked.

A salaried employee can still be nonexempt. For a nonexempt salary, the calculation depends on what hours the salary is understood to cover and the method permitted by law. Salary alone does not remove overtime rights.

Certain promised or performance-based bonuses, commissions, and shift differentials may need to be included when finding the regular rate. A bonus label does not decide the issue. Truly discretionary bonuses and other payments specifically excluded by the FLSA may be treated differently.

If an includable bonus covers more than one workweek, it may need to be allocated back to those weeks and overtime pay recalculated.