WHAT IS OVERTIME PAY: Meaning, How It Works, Example & Rate

What is Overtime Pay
Image Credit: MRSC

Overtime pay is an additional amount an employee earns for working more than the standard number of hours. It can be a great way to get extra money, but it is important to know that there are rules about when and how much overtime an employee can work. Whether you’re in California, New York, or anywhere in the United States, you should know what overtime pay entails; the rate, at least an example like overtime pay for 17 an hour, and so on.

For example, in the United States, employees can earn more if they work more than 40 hours a week. So, if you are an employee regularly working overtime, this post will guide you to know your rights and overtime pay rate. 

What Is Overtime Pay?

Overtime pay is an extra compensation an employee earns for working more than 8 hours a day or 40 hours a week. What overtime pay means is the rate one gets for additional hours, an example, in California, or 17 an hour. It is usually calculated as 1.5 times the worker’s regular hourly wage. 

For example, if employees normally earn $10 per hour, their pay would be $15 an hour. However, the pay is to compensate employees for the extra hours they work and incentivize them to stay within the 40-hour work week.

Types Of Overtime 

There are three types of overtime: Time off in Lieu (TOIL), voluntary, and compulsory overtime

#1. Time off in lieu (TOIL):

Time off in lieu is a system that allows employees to take time off from work for overtime rate. Under this system, employees can accrue time off from work, which they can then take at a later date. This can be beneficial for both employees and employers, as it allows employees to have more flexible schedules and employers to save on overtime costs.

#2. Voluntary Overtime:

Voluntary overtime is when an employee agrees to work additional hours, over and above their contracted hours, usually in return for extra income. It can be a regular arrangement, for example working an extra day each week, or it can be on an ad hoc basis, for example agreeing to work an extra shift to cover for a colleague who is sick.

#3. Compulsory overtime:

Compulsory overtime is when an employer requires an employee to work beyond their scheduled hours. This can be for reasons such as meeting a deadline or increasing productivity. In addition, it is typically mandatory, as employees may need to work additional hours with little or no notice and may not be able to refuse. 

How Does Overtime Pay Work?

Overtime pay is governed by the Fair Labor Standards Act (FLSA), which sets the wages and extra time standards. The FLSA requires covered workers to pay covered employees who work more than 40 hours in a workweek at a rate of not less than one and one-half times the employee’s regular pay rate.

In other words, overtime pay is not for all employees. The FLSA exempts certain executive, administrative, professional, and outside sales workers and some computer professionals from the requirements.

In addition, some states have overtime laws that may exempt different categories of workers. For example, California exempts certain professional, technical, and managerial employees, as well as some outside employees from its overtime laws.

Note that the FLSA does not require employers to pay employees for work hours that are not worked, such as vacation time, sick leave, or holiday time. However, if an employer does have an overtime pay policy, it must comply with the FLSA’s standards.

What Is The Overtime Pay Rate?

The overtime pay rate is a worker’s pay for working more than 40 hours per week. The pay rate is typically 1.5 times the regular pay. For instance, in many countries, an overtime rate is under the law to compensate employees for working excessive hours. 

In some cases, employees may voluntarily agree to work more than 40 hours per week and may receive a salary at their company’s discretion. In other cases, employees may have to work overtime hours as a condition of their employment.

Whichever, there are some exceptions to the pay rate, such as for salaried employees or employees who are exempt from an additional period. Exempt employees are typically those in management positions or with a certain level of education or experience.

Who Is Eligible For Overtime Pay?

The Fair Labor Standards Act (FLSA) also governs overtime pay eligibility requirements. To be eligible employees must be:

  • A non-exempt under the FLSA. Non-exempt employees are those who get hourly payment and are not exempt from overtime pay requirements. 
  • They must work more than 40 hours in a workweek. The pay is at a rate of 1.5 times the normal hour.

Additionally, there are some exceptions to the pay eligibility requirements. For example, certain employees are exempt from it even if their salary is hourly. Exempt employees are those who are salaried and are exempt from the overtime pay requirements. 

These employees include certain types of professionals, such as lawyers and doctors. And some employees are exempt from the requirements even if they are salaried. These employees include certain executive, administrative, and professional employees.

What is Overtime Pay in California 

In California, overtime pay is 1.5 times an employee’s regular hourly rate for any hours over 8 hours in a day or over 40 hours in a week. This overtime rate must go to all non-exempt employees, regardless of their position or salary. 

Some exceptions to this rule may apply to certain employees, such as those considered exempt under state or federal law. Hence, if you are living or working in California, you can confirm the overtime pay from your company or employer.

Is Overtime Calculated On Basic Or Gross Salary?

In the United States, overtime is on an employee’s gross salary. This means that overtime is calculated on the total amount of money an employee earns in a week including any bonuses, commissions, or other forms of compensation. 

How Do You Calculate Overtime Pay? 

Overtime pay is calculated at 1.5 times an employee’s regular pay rate for all hours over 40 in a workweek. Here’s how to calculate overtime pay:

  • First, determine the employee’s regular hourly pay rate. 
  • Then, count the number of hours the employee worked over 40 during the workweek. For every hour over 40, the employee can earn 1.5 times their regular hourly pay.
  • Lastly, multiply 1.5 by the overtime hour.

Furthermore, you can calculate your overtime pay daily, weekly or monthly.

Overtime Pay Example 

Here is an overtime pay example, if a worker earns $10 per hour on a regular work hour and works for 45 hours in a week, his payment will be:

Regular pay: $10 x 40 hrs = $400.  

Overtime pay: $10 x 1.5 x 5 hrs = $75. 

So, his total weekly pay will be $400 + $75 = $475.

What is Overtime Pay for 17 an hour

Another overtime pay example is if you earn $17 an hour, your overtime pay would be $25.50 an hour. That is, overtime pay for 17 an hour multiplied by 1.5, which is $25.50.

The Benefits And Drawbacks Of Overtime Pay

Overtime pay can be a great way to make some extra money, but it can also be a burden if you are not careful. Here are some things to consider before you agree to work overtime:


  • Overtime is a legit way you get fairly compensated for your time and efforts.
  • You will typically be paid 1.5 times your regular hourly rate for any overtime hours worked. In other words, you can earn some extra money.
  • Overtime hours can often be flexible. So you can work them around your other commitments.

And Drawbacks:

  • Working too many hours can be detrimental to your health and make it difficult to maintain a healthy work-life balance.
  • It can be exhausting and may lead to burnout if you are not careful.
  • You may have less time for your personal life and hobbies if you are working extra hours.

Overall, it is advisable to weigh these benefits and drawbacks before agreeing to work additional hours.

What Is The Meaning Of Pay Overtime? 

The meaning of pay overtime is that an employee works more than the normal number of hours and receives extra pay. It is a common phrase in the business world to refer to a percentage of the employee’s regular hourly pay and the extra work they have done. This is a way to motivate employees to work harder and to do more tasks in a shorter period.

What Is Overtime For $15? 

Overtime for $15 is $22.50. So, if you normally make $15 per hour, your additional income will be $22.50 per hour ($15 x 1.5).

What Is Overtime For $20 An Hour? 

Overtime for $20 an hour is $30. Here’s how to calculate it: For hourly workers, overtime is typically paid at a rate of 1.5 times their regular rate. So, $20 x 1.5 = $30 per hour.

How Do You Calculate Overtime As Per Labour law? 

According to the Fair Labor Standards Act, employees are entitled to one and a half times their regular pay rate for any hours worked over 40 in a workweek. To calculate overtime as per the labor law, you need to take into account a few different things:

  • First, the number of hours worked in a week. If an employee works more than 40 hours in a week, then they will get extra income. 
  • Secondly, the employee’s hourly rate. It is usually at 1.5 times the regular hourly rate. So, if a worker makes $10 per hour, their salary will be $15 an hour. 
  • Thirdly, if the employee is exempt or non-exempt. Exempt employees cannot receive an additional wage, while non-exempt employees can.
  • And finally, the state in which the employee works. Some states have different overtime laws than others.


Overtime pay is an important benefit that helps workers earn a livable wage. It is typically calculated as 1.5 times an employee’s regular hourly rate and for any hours worked over 40  a week. While overtime pay is seen as a positive way to make additional income, you should consider the advantages and disadvantages before accepting the offer.



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