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How To Calculate Overtime

How To Calculate Overtime Wages Infographic

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Knowing how to calculate your correct overtime wages is crucial. Your employer may be taking advantage of you, but without following your own hours, you would never know.

The Department of Labor has an overtime calculator that can help. It’s extremely comprehensive, with different calculators for workers who make tips, salaries and hourly wages.

How Do You Calculate Overtime Pay?

We suggest tracking your hours on a weekly basis and figuring out how much you’re owed under federal law. Then check to make sure that your paycheck or cash wage reflects your real pay. That’s the best, and often the only way to catch a wage and hour violation.

Basic Overtime Calculations: A Snapshot

According to federal law, the vast majority of workers in America are entitled to overtime wages at 1.5-times (150%) their regular rate of pay. Overtime kicks in after you’ve worked 40 hours in a single workweek, which is defined as a regular and repeating period of 7 consecutive 24-hour periods.

If you normally make $8 per hour, your overtime wage is $12, because that’s $8 times 1.5. And if you make $16 per hour normally, your overtime rate should be $24 – again, that’s $16 multiplied by 1.5. Note that calculations get a little more complicated when you make bonuses or commissions; we’ll get to those complexities a little later in this guide.

But you also need to be aware that several states (most notably California) have passed overtime laws of their own; many of these state-specific overtime regulations are more generous than the federal minimum. You are always entitled to the higher wage. When your state’s overtime law conflicts with the federal overtime law, you deserve the most money possible.

Different Calculations Based On Your Circumstances

If you’ve already determined that you’re entitled to overtime under the Fair Labor Standards Act (FLSA), you’re considered a “nonexempt” worker under federal law. How you calculate your extra wages will depend on how you get paid:

Before we begin, note that overtime is always calculated on a weekly basis; averaging two or more weeks together to get around the 40 hour limit is illegal. For every week, you’ll consider the hours you actually worked, how much you’re normally paid and determine your overtime wages based on those numbers.

Remember: nonexempt workers are entitled to one-and-a-half (1.5-times) their regular rate for all hours worked over 40 in a workweek.

Hourly Employees

1. Add up all the hours you worked in the week.

For the sake of argument, let’s say you worked 48 hours this week. Hours worked must include all pre- and post-shift work you do, as well as lunch breaks that get interrupted by your duties. Whenever you’re actually working, you deserve to get paid for it.

2. Take your regular rate, your normal hourly wage, and multiply it by 1.5.

Assume you make $9 per hour normally. That’s your regular rate. Multiply that by 1.5: $9 times 1.5 equals $13.50. That’s your overtime rate.

3. Calculate your “straight-time” pay first. That’s how much you made for the first 40 hours you worked.

Multiply 40 hours by $9 per hour, your regular rate. 40 times $9 is $360.

4. Now work out your overtime hours.

Take the 8 hours of overtime you worked and multiply them by your overtime rate, $13.50. 8 times $13.50 equals $108.

5. Add your overtime wages to your straight-time wages.

$360 plus $108 equals $468. Those are your proper wages for the week.

Want to do this calculation quickly? Check out our overtime calculator here.

Tipped Employees

Employers are allowed to take a “tip credit” for workers who make regular tips, reducing their cash wages below the applicable minimum wage. Added together, the tip credit plus your cash wages have to be at least the minimum wage.

Let’s say you make good tips and your employer takes the maximum tip credit allowed by federal law: $5.12, making the cash wages they actually pay you $2.13.

For overtime, they’re not allowed to start with that low cash wage to calculate your overtime rate; they have to use at least the minimum wage. If your tips and cash wage add up to an hourly wage higher than the minimum, they have to use that higher wage.

1. Add up all the hours you worked this week.

Let’s say you worked 46 hours.

2. Take the federal or state minimum wage and multiply it by 1.5.

The FLSA minimum wage is $7.25, multiplied by 1.5 that makes $10.88.

3. Subtract the tip credit from the amount in (2).

$10.88 minus $5.12 equals $5.76. That’s your overtime rate.

4. Use that new number to calculate your overtime wages.

Since you worked 6 hours more than 40, multiply 6 by $5.76 to get $34.56.

5. Add your overtime to your cash wages.

Multiply 40 hours by your straight-time wage of $2.13, which equals $85.20. Then add your overtime wages – $85.20 plus $34.56 equals $119.76. Those are your total cash wages for the week.

Salaried Employees

Some employees who make a salary are entitled to overtime, although many employers don’t honor that right. To learn if you’re entitled to the FLSA’s protections, click here.

1. First, check your contract to find out how many hours you’re expected to work each week.

For this example, we’ll say your salary covers 35 hours of work per week.

2. Now take your weekly salary (if you get paid bi-weekly, just divide your salary by 2 first) and divide it by the hours it’s meant to compensate you for.

Let’s say you get paid $460 every week. Divide $460 by 35 to get $14.46.

That’s your straight hourly rate, not your overtime wage. We’ve simply converted a salary into an hourly wage.

3. Since your salary is only meant to cover 35 hours, 5 hours less than the 40 required before overtime, those 5 hours should be paid at the hourly wage we just calculated.

5 times $14.46 is $72.30.

4. Then work out your overtime, multiplying your overtime rate by your hours over 40.

$14.46 multiplied by 1.5 is $21.69. That’s your overtime wage. Multiply $21.69 by your overtime hours, 5, and you get $108.45.

5. Now add everything up:

Add your base salary, $460, to the amount we got in (3), $72.30, and then add your overtime, $108.45, for a total of $640.75. That’s how much you should make for that week.

What If My Calculation Doesn’t Match What I’m Paid?

Try tracking your hours, calculating your correct overtime rate and checking it against what you actually make. Do they match?

If not, your employer may be violating your wage and hour rights. Contact the lawyers at WageAdvocates.com to learn more about getting back double what you earned.

Wage Advocates
Reviewed by Raul R., on .
Thank you! It was such a relief to know that Wage Advocates were working hard to get me compensation for my unpaid overtime."
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