Overtime mistakes are one of the most common — and costly — payroll errors. The rules are simple once you see them worked out. Here’s how to calculate overtime correctly, with examples.
The basic rule
Under federal law, non-exempt employees earn 1.5× their regular rate for hours over 40 in a workweek. So someone at $20/hour who works 45 hours earns 40 × $20 + 5 × $30 = $950.
Daily overtime (some states)
California and a few others add daily overtime: 1.5× after 8 hours in a day and 2× after 12. A 13-hour day there is 8 regular + 4 OT + 1 double-time — even if the week is under 40 hours.
Blended rate (two pay rates)
If someone works two roles at different rates in one week, overtime is based on the weighted-average regular rate, not just the higher one. This is where manual math usually goes wrong.
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Frequently asked questions
Is overtime based on 40 hours or 8 hours a day?
Federally it’s 40 hours per week. Some states (e.g. California) also require daily overtime after 8 hours.
How is overtime calculated for two pay rates?
Use the weighted-average regular rate across both jobs, then pay 1.5× of that for OT hours.
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