Overtime Pay: How Time-and-a-Half Works

Overtime pay is the higher rate you earn for extra hours. Under federal law, most hourly workers who put in more than 40 hours in a workweek must be paid time and a half, meaning one and one-half times their regular rate for the extra hours. The rule comes from the Fair Labor Standards Act, or FLSA, and it sets the floor that employers must meet.

The 40-hour rule

Federal overtime is based on a single workweek, a fixed and recurring period of seven consecutive days. Hours over 40 in that week are overtime. There is no federal requirement to pay extra for long single days, for weekends, or for holidays as such. What counts is the weekly total. Averaging two weeks together to dodge the threshold is not allowed, because each week stands on its own.

The regular rate is more than your base wage

Overtime is calculated on your "regular rate," and that rate is often higher than your stated hourly wage. The regular rate includes most forms of pay for the week, not just your base. Nondiscretionary bonuses, the kind promised for hitting a target or a production goal, generally have to be folded into the regular rate before overtime is figured. Shift differentials and some commissions can count too. Truly discretionary bonuses, given at the employer's option with no promise, usually do not. The upshot is that overtime in a week with a production bonus can be worth more per hour than your base wage alone suggests.

Exempt versus non-exempt

Not everyone earns overtime. Workers fall into two groups. Non-exempt employees are covered by the FLSA overtime rule and must be paid the premium. Exempt employees are not entitled to it. Whether a job is exempt depends on how the person is paid and what they do, generally a salaried role above a set salary level performing certain executive, administrative, or professional duties. A job title alone does not decide it. The actual duties and pay do, and misclassification is common.

State rules can go further

Federal law is the floor, not the ceiling. Some states require more. A handful, including California, use daily overtime, so hours past a set number in a single day earn the premium even if the week stays under 40. Some states add double-time for very long days or for a seventh consecutive workday. Where state and federal rules differ, the one more favorable to the worker applies. Check your own state's rule, because it can change the math.

A note on the overtime deduction at tax time

For tax years 2025 through 2028, federal law provides a temporary deduction for the premium portion of overtime pay, the extra half above your regular rate, claimed on your tax return. It does not change how overtime is withheld from your paycheck, and it comes with income limits and eligibility rules that depend on your situation. It is a deduction taken when you file, not a change to your hourly math, and this is general information rather than tax advice. Confirm the current rules or check with a tax professional before relying on it.

To see how overtime hours change a specific paycheck, use the overtime calculator or the main take-home pay calculator.