Overtime is the additional amounts paid to hourly employees who work more than 40 hours in a workweek. Federal law requires that hourly employees who work more than 40 hours in a workweek must be paid at a higher rate for the overtime hours, at a minimum of 1 1/2 times the regular pay rate.
Overtime Pay is the amount of overtime paid to each employee in a pay period. Overtime pay is calculated:
Hourly pay rate x 1.5 x overtime hours worked.
Here is an example of total pay for an employee who worked 42 hours in a workweek:
- Regular pay rate x 40 hours = Regular pay, plus
- Regular pay rate x 1.5 x 2 hours = Overtime pay, equals
- Total pay for the week.
A business may pay overtime at a higher rate or it may pay overtime before 40 hours (at 35 hours a week, for example), but the minimum is 1.5 times regular pay after 40 hours in a workweek.