Guides

How to calculate overtime hours for hourly employees

Overtime math is simple once two things are pinned down: which seven days count as a week, and which hours count as worked. This guide covers the federal rule and the common places states differ. It is not legal advice; check your state labor department for the rules where you operate.

The federal rule: over 40 in a workweek

Under the Fair Labor Standards Act, non-exempt employees earn at least one and a half times their regular rate for hours worked over 40 in a workweek. It’s counted per week, not per day and not per pay period.

Pick a fixed workweek

A workweek is any fixed, recurring run of seven days, such as Sunday through Saturday. It doesn’t have to match your pay period. If you pay every two weeks, you still look at each week on its own: 45 hours one week and 35 the next is 5 hours of overtime, even though the two weeks total 80.

Worked example

Marcus earns $18.00 an hour and worked 43 hours 15 minutes this week.

• Total hours: 43.25
• Regular hours: 40 × $18.00 = $720.00
• Overtime hours: 3.25 × $27.00 (1.5 × $18.00) = $87.75
• Gross pay: $807.75

What counts as hours worked

• Counts: time on the clock, short rest breaks, required meetings and training, and work done before or after the shift that you know about.
• Usually doesn’t: bona fide meal breaks where the person is fully relieved of work (often 30 minutes or more), and the normal commute.
• Paid time off and holidays generally don’t count toward the 40, because no work was done.

Where states change the answer

Some states add rules on top of the federal one. California, for example, also requires overtime for hours over 8 in a day and double time in some cases. A few other states have daily overtime or special rules for certain industries. If you’re in one of those states, the weekly-over-40 number is a floor, not the answer.

Keep the records

Employers have to keep records of hours worked each day and each week for non-exempt staff. A weekly timesheet with time in, time out and breaks, approved by a manager, covers the day-to-day part. Grab our free weekly timesheet template or add up a week with the time card calculator.