A $15-an-hour employee who works 45 hours in a week earns $712.50, not $675.00, because federal law has required time-and-a-half for hours past 40 since 1938. The arithmetic is straightforward. The vocabulary that decides who gets it and when is not.
Core overtime terms
These terms appear in nearly every overtime dispute and every paycheck calculation.
| Term | Definition |
|---|---|
| Regular rate of pay | All remuneration for employment divided by hours worked. The basis for every overtime calculation. |
| Time and a half | Overtime pay at 1.5 times the regular rate. Federal law requires this for hours over 40 in a workweek. |
| Double time | Overtime pay at 2 times the regular rate. No federal requirement exists. California mandates it past 12 hours in a day. |
| Workweek | A fixed, recurring period of 168 hours (7 consecutive 24-hour periods). The employer chooses when it starts. |
How time-and-a-half arithmetic works
The table below assumes the federal threshold: overtime after 40 hours in a single workweek, paid at 1.5 times the regular hourly rate. These are worked examples only. The overtime threshold and exemption rules are set by law and change; check the Department of Labor Wage and Hour Division for the current figures.
| Hourly Rate | 40 Hours | 45 Hours | 50 Hours | 60 Hours |
|---|---|---|---|---|
| $15/hour | $600.00 | $712.50 | $825.00 | $1,050.00 |
| $20/hour | $800.00 | $950.00 | $1,100.00 | $1,400.00 |
| $25/hour | $1,000.00 | $1,187.50 | $1,375.00 | $1,750.00 |
| $35/hour | $1,400.00 | $1,662.50 | $1,925.00 | $2,450.00 |
Reading the table
At $15 an hour and 45 hours: 40 straight-time hours ($600.00) plus 5 overtime hours at $22.50 ($112.50) equals $712.50.
At $25 an hour and 50 hours: 40 straight-time hours ($1,000.00) plus 10 overtime hours at $37.50 ($375.00) equals $1,375.00.
At $35 an hour and 60 hours: 40 straight-time hours ($1,400.00) plus 20 overtime hours at $52.50 ($1,050.00) equals $2,450.00.
Classification terms
Whether overtime applies at all turns on one word: exempt.
Exempt: A worker not entitled to overtime under the FLSA. Must meet three tests: salary basis, salary level, and duties.
Non-exempt: A worker entitled to overtime pay. Most hourly staff fall here. So do some salaried staff.
Salary basis: Paid a predetermined amount that cannot be reduced based on quality or quantity of work.
Duties test: Assessment of whether a worker's primary duties are executive, administrative, professional, computer-related, or outside sales.
The salary threshold
A Department of Labor rule set the salary threshold at $844 per week ($43,888 per year) effective July 2024. That figure is tied to 2024. A second increase was scheduled for January 2025. Before relying on either number, check the current threshold with the Department of Labor Wage and Hour Division. Blue-collar workers and first responders are always non-exempt, regardless of salary.
Why classification matters
Misclassification is a serious legal issue. A worker called "salaried" who does not meet all three tests is still owed overtime.
Calculation terms
Overtime arithmetic gets complicated fast when pay rates vary.
Fluctuating workweek method: For salaried non-exempt staff with varying hours. Overtime is paid at 0.5x (half-time) because the salary covers straight time for all hours. Sometimes called Chinese overtime.
Weighted average: Required when a worker holds multiple pay rates in one workweek. Also called a blended rate.
Shift differential: Additional pay for working less desirable shifts (nights, weekends). Must be included in the regular rate calculation.
Pyramiding: The prohibited practice of counting the same overtime hours under multiple rules, such as both daily and weekly overtime. Employers cannot stack these.
Belo plan: A rarely used, guaranteed salary plan for staff with irregular hours. Subject to strict requirements.
Comp time: Paid time off instead of overtime cash. Generally only legal for public sector workers. Private employers cannot offer this instead of overtime pay.
When the fluctuating workweek method applies
The method works only for salaried non-exempt staff whose hours genuinely vary week to week. The employer and the worker must have a clear mutual understanding that the salary covers all straight-time hours. Check the current legal status with the Department of Labor; the rules have been subject to regulatory changes.
Weighted average in practice
A team member who works 30 hours at $15 and 20 hours at $20 in one workweek has a weighted average above $15. The overtime premium is calculated on that blended rate, not the lower one.
Industry-specific terms
Different industries operate under different overtime frameworks.
Healthcare 8/80 rule: Hospitals and nursing homes may use a 14-day period. Overtime applies after 8 hours per day or 80 hours per 14 days.
Tip credit: Employers may pay tipped staff below minimum wage if tips make up the difference. The credit affects overtime calculations.
Piece rate: Pay based on units produced rather than hours worked. Overtime must still be calculated.
Chinese overtime: Colloquial term for the fluctuating workweek half-time method.
Reporting time pay: Required in some states when a worker reports for a scheduled shift but is sent home early.
Healthcare workers and the 8/80 rule
The 8/80 rule is an alternative to the standard 40-hour workweek. An employer must choose one system or the other; they cannot mix them to minimise overtime.
Tipped staff and overtime
The tip credit reduces the employer's minimum-wage obligation but does not reduce the regular rate for overtime calculations. The full minimum wage, before the tip credit, is the floor for the regular rate.
Legal and regulatory terms
These terms define what counts as work time and what does not.
On-call time: Time a worker must be available for work. Whether it counts as hours worked depends on whether the person can use the time for personal activities.
Waiting time: Time spent waiting for work. "Engaged to wait" is compensable; "waiting to be engaged" is not.
Portal-to-Portal Act: Defines compensable work time. Commuting is generally not compensable, but travel between work sites may be.
De minimis time: Insignificant amounts of time that courts may disregard for overtime purposes. No bright line exists, but courts often use one minute as a guideline.
Rounding: Practice of rounding time clock punches to the nearest increment. Must be neutral over time and cannot favour the employer.
Automatic meal break deduction: Employer practice of deducting meal periods regardless of whether work was performed. Risky and often illegal if the person works through breaks.
Split shift: A work schedule interrupted by a non-paid break longer than a meal period. Some states require extra pay.
Spread of hours: Additional pay required when a workday exceeds a certain length. New York hospitality workers get an extra hour at minimum wage when the workday exceeds 10 hours.
On-call time: the line that matters
The test is whether the person can use the time for their own purposes. A nurse required to stay in the hospital and respond within five minutes is working. A maintenance person carrying a pager who can go to the supermarket is probably not.
Rounding rules
Rounding to the nearest quarter-hour is common and legal, provided the system rounds up and down neutrally. A system that always rounds in the employer's favour violates the FLSA.
State-specific concepts
State rules can be stricter than federal law. California sets the most aggressive thresholds.
California alternative workweek: Allows 4/10 or 3/12 schedules without daily overtime if workers vote to adopt them. Overtime still applies after 40 hours per week.
California reporting time pay: Pay required when a worker reports for a scheduled shift but is sent home early. Usually two hours of pay.
Daily overtime: California requires overtime after 8 hours per day and double time after 12 hours per day. Alaska and Nevada have similar daily thresholds for certain workers.
New York spread of hours: Requires an extra hour of minimum wage for hospitality staff when the workday exceeds 10 hours.
California daily overtime
California law triggers overtime at 1.5x after 8 hours in a day and 2x after 12 hours. The seventh consecutive day worked brings 1.5x for the first 8 hours and 2x after that. These rules operate alongside the weekly 40-hour threshold. An employer pays the higher of the two calculations, not both.
Nevada's changing rules
Nevada requires daily overtime after 8 hours for workers earning less than 1.5 times the minimum wage. A 2024 ballot measure altered daily overtime for certain workers. Check the current Nevada Labour Commissioner rules before relying on any summary.
Alaska and Colorado
Alaska mandates overtime after 8 hours in a day and 40 hours in a week. Colorado requires overtime after 12 hours in a day and 40 hours in a week. Both states set the rate at 1.5x.
What changes on a pay stub
The most important distinction is exempt versus non-exempt. If non-exempt, every hour over 40 in a workweek counts toward overtime, regardless of part-time status.
Overtime is calculated on gross pay before taxes and deductions. Holiday pay, vacation pay, and sick pay do not count as hours worked toward the 40-hour threshold.
One persistent myth: overtime is taxed at a higher rate. False. Overtime is taxed as ordinary income at the same marginal rate as regular pay. Withholding may be higher on a single cheque because IRS tables treat that cheque as representative of annual income, but the actual tax liability is based on total annual earnings.
Another myth: an employer can offer comp time instead of cash. For private-sector employers, this is generally illegal. Public-sector workers may receive compensatory time off at 1.5x under certain conditions.