How to calculate overtime under the FLSA, with examples
Published · 7 min read
Under the federal Fair Labor Standards Act (FLSA), non-exempt employees must be paid at least one and a half times their regular rate for every hour over 40 in a workweek. The rule is short, but the details (what a workweek is, what counts as the regular rate, how to round punches) are where most payroll mistakes happen. This guide walks through each one with worked examples.
The basic rule: 40 hours in a workweek
Federal law looks at the week, not the day. An employee who works 10 hours on Monday and 6 hours on Tuesday has worked 16 regular hours as far as the FLSA is concerned. Overtime starts only when the total for the workweek goes over 40.
The FLSA does not require extra pay for weekends, holidays or night shifts. Many employers pay those premiums by policy or contract, and some states add daily overtime rules, but the federal minimum is the weekly 40-hour threshold.
What counts as a workweek
A workweek is a fixed, recurring period of 168 hours: seven consecutive 24-hour periods. It can start on any day and at any hour, for example Sunday at midnight or Wednesday at 6:00, but once you set it, it should stay the same. You may not average hours over two weeks: 50 hours one week and 30 the next still means 10 overtime hours in the first week.
Example 1: one hourly rate
An employee earns $20 an hour and works 46 hours in the workweek.
- Regular pay: 40 hours × $20 = $800
- Overtime pay: 6 hours × $30 (1.5 × $20) = $180
- Total for the week: $980
The regular rate is more than the hourly wage
Overtime is 1.5 times the regular rate, and the regular rate includes most payments for work, not only the base hourly wage. Shift differentials and non-discretionary bonuses (for example a bonus promised for attendance or productivity) generally have to be added in. Discretionary gifts, paid time off and premiums that are themselves already overtime are generally left out.
When an employee works two jobs at two rates in the same week, a common method is the weighted average: total straight-time pay divided by total hours worked.
Example 2: two rates in the same week
An employee works 30 hours as a cashier at $18 and 15 hours as a shift lead at $22, 45 hours in total.
- Straight-time pay: 30 × $18 + 15 × $22 = $540 + $330 = $870
- Regular rate: $870 ÷ 45 hours = $19.33
- Overtime premium: 5 overtime hours × $19.33 × 0.5 = $48.33
- Total for the week: $870 + $48.33 = $918.33
Rounding punches
Federal rules allow rounding clock times to the nearest 5, 10 or 15 minutes, as long as the rounding is neutral over time: it must sometimes favor the employee and sometimes the employer. A policy that always rounds in the employer's favor, such as rounding every clock-in up and every clock-out down, is a classic source of back-pay claims.
Common mistakes
- Giving comp time instead of overtime pay. Private employers generally cannot do this; overtime has to be paid in the pay period it was earned.
- Paying a flat rate for extra shifts without checking the 40-hour total.
- Leaving bonuses and shift differentials out of the regular rate.
- Changing the workweek start to move hours out of a busy week.
- Not paying for work done before clocking in or after clocking out.
State law can be stricter
The FLSA is a floor. Several states have their own overtime rules, and California adds daily overtime, double time and a seventh-day rule. When federal and state rules differ, the employee gets whichever is more generous. See our guide to California overtime for the details.
How KronosTeam calculates it
In KronosTeam, choose the US federal (FLSA) preset under Settings → Payroll and set the day your workweek starts. Every clock-in is placed in your time zone, hours over 40 in the workweek are paid at 1.5×, and you can turn on rounding to 5 or 15 minutes. Pay is calculated from the hourly rate in each employee's contract; bonuses that change the regular rate still need to be added in your payroll software.
Frequently asked questions
Is overtime calculated per day or per week?
Under federal law, per workweek: hours over 40 in a fixed seven-day period. Some states, such as California, also have daily overtime.
Do I have to pay extra for weekends or holidays?
Not under the FLSA. Weekend and holiday premiums come from your policy, contracts or, in some cases, state law.
Can I give time off instead of overtime pay?
Private employers generally cannot replace overtime pay with comp time. Overtime must be paid as wages.
Is this legal advice?
No. It is a general summary of federal rules. Check the Department of Labor's guidance and your state's rules, or ask an employment attorney about your situation.