Overtime Pay Calculation Guide (2026)
Overtime is where many paychecks — and many pay disputes — are won or lost. Under the federal FLSA, overtime is 1.5 times your regular rate for hours over 40 in a workweek. But "regular rate" is trickier than it sounds, and several states add daily-overtime rules. This 2026 guide walks the calculation, shows worked examples, and flags the traps that shortchange workers.
The Federal 40-Hour Rule
The FLSA requires overtime (1.5x) for nonexempt employees working more than 40 hours in a workweek (any fixed, regularly recurring 7-day period the employer sets). It is measured by workweek, not by pay period. The pay schedule guide notes why biweekly aligns more cleanly with this rule. Hours in a week under 40 are never "banked" to a later week.
What Is the "Regular Rate"?
The regular rate is not just your hourly wage — it includes most extras: nondiscretionary bonuses, shift premiums, and some commissions. Divide total straight-time earnings by total straight-time hours to get it. Overtime is then 1.5 times that rate for each OT hour. The bonus guide covers which bonuses count. Getting the regular rate wrong is the most common overtime underpayment.
Worked Example: Hourly
A worker at $20/hour who works 45 hours: 40 hours at $20 = $800, plus 5 OT hours at $30 (1.5 x $20) = $150, total $950. If a $100 nondiscretionary bonus is added, the regular rate becomes ($800 + $100) / 40 = $22.50, so OT is $33.75/hour, raising the total. The Net Pay Calculator models OT within a paycheck.
Salaried Non-Exempt Workers
Some salaried employees are still nonexempt and owed overtime. To compute their OT, divide the weekly salary by the number of hours the salary is intended to cover (often 40) to get the regular rate, then pay 1.5x for extra hours. The exemption guide explains who is exempt — and the $35,568 salary threshold that still governs in 2026 after a proposed raise was vacated.
State Daily-Overtime Rules
Several states go beyond federal law. California requires 1.5x over 8 hours in a day, 2x over 12, and 1.5x on the 7th consecutive day (2x after 8). Alaska and Nevada have daily OT in some cases; Colorado has phased rules. These can dwarf federal OT. The California guide details the daily thresholds.
Comp Time Instead of Cash?
Private employers generally cannot substitute comp time for overtime — they must pay cash at 1.5x. Public-sector employers may offer comp time under stricter rules. If a private employer offers "time off later" instead of OT pay, that is usually noncompliant. The hourly vs salaried guide weighs these trade-offs.
Common Overtime Traps
Traps: misclassifying nonexempt staff as exempt; excluding bonuses from the regular rate; averaging two weeks to dodge the 40-hour line; and ignoring state daily rules. Tipped workers have special regular-rate rules tied to the tip credit (see the minimum wage guide). Track your own hours; payroll errors favor the employer when unchallenged.
How to Verify Your OT
Keep your own hour log. Recompute the regular rate including bonuses, apply 1.5x to OT hours, and compare to the stub. Use the Overtime Pay Calculator for a quick check and the paystub guide to read the lines. If it is short, raise it with payroll in writing and, if needed, your state labor agency.
A Salaried Nonexempt Example
A salaried nonexempt worker at $52,000/year (intended 40-hour week) who works 48 hours: regular rate = $52,000 / (40 x 52) = $25/hour. OT = 8 x $37.50 = $300/week extra. Annual OT = $15,600, lifting total to $67,600. Many employers wrongly exclude such staff from OT by calling them salaried; if duties are nonexempt, the OT is still owed. The exemption guide explains the test.
Bonuses and the Regular Rate
Nondiscretionary bonuses (expected, contractual) are part of the regular rate; discretionary ones are not. Including a $2,000 expected bonus in the regular-rate math can raise OT by tens of dollars per OT hour. Excluding it is the most common underpayment. The bonus guide distinguishes the two types and their withholding.
State Daily-Overtime in Practice
In California, 10 hours in a day at $20/hour = 8 x $20 + 2 x $30 = $220, versus $200 straight — $20 more for one day. Over a year that compounds. Alaska and Nevada have limited daily OT; Colorado has phased rules. Federal law alone would pay nothing extra that day if under 40 weekly. The California guide details the thresholds and the 7th-day rule.
Verify Your Own OT
Keep a personal hour log, recompute the regular rate including bonuses, apply 1.5x to OT hours, and compare to the stub. Use the Overtime Pay Calculator for a quick check and the paystub guide to read the lines. If short, raise it in writing with your state agency as backstop. Accurate records win disputes.
The Regular Rate, Step by Step
Compute the regular rate by dividing total straight-time earnings (including nondiscretionary bonuses and shift premiums) by straight-time hours, then multiply by 1.5 for each OT hour. A worker at $20 with a $100 bonus over 45 hours: rate = ($800 + $100) / 40 = $22.50; OT = 5 x $33.75 = $168.75. The Net Pay Calculator models OT within a paycheck so you can verify.
Common Employer Errors
Errors include excluding bonuses from the regular rate, averaging two weeks to dodge the 40-hour line, and ignoring state daily OT. Tipped workers have special regular-rate rules tied to the tip credit. The minimum wage guide maps tip-credit states; the bonus guide distinguishes bonus types that count.
Federal vs State in Practice
You are owed the higher of federal or state OT. In California, daily OT can dwarf federal weekly OT; in most states only the federal 40-hour rule applies. Know your state. The California guide details daily thresholds; the exemption guide explains who is even covered.
Keep Your Own Records
Payroll errors favor the employer when unchallenged, so log your hours and recompute OT yourself. Use the Overtime Pay Calculator for a check and the paystub guide to read the lines. If short, raise it in writing with your state labor agency as backstop; accurate records win disputes.
The Regular Rate, Worked Example
Compute the regular rate by dividing total straight-time earnings (including nondiscretionary bonuses and shift premiums) by straight-time hours, then multiply by 1.5 for each OT hour. At $20 with a $100 bonus over 45 hours: rate = ($800 + $100) / 40 = $22.50; OT = 5 x $33.75 = $168.75. The Overtime Calculator does this instantly; the Net Pay Calculator folds OT into a paycheck.
Frequent Overtime Missteps
Errors include excluding bonuses from the regular rate, averaging two weeks to dodge the 40-hour line, and ignoring state daily OT. Tipped workers have special regular-rate rules tied to the tip credit. The minimum wage guide maps tip-credit states; the bonus guide distinguishes bonus types that count toward the rate.
Federal Versus State Overtime
You are owed the higher of federal or state OT. In California, daily OT can dwarf federal weekly OT; in most states only the federal 40-hour rule applies. Know your state. The California guide details daily thresholds; the exemption guide explains who is even covered, because exempt staff get no OT at all.
Tipped and Commission OT
Tips and commissions enter the regular rate for nonexempt staff, so a strong tip or sales night also boosts OT. Excluding them is a frequent underpayment. The commission guide covers the same split for variable pay; the paystub guide shows where OT posts so you can verify the regular-rate math.
Track Hours, Verify the Stub
Payroll errors favor the employer when unchallenged, so log your hours and recompute OT yourself. Use the Overtime Pay Calculator for a check and the W-4 guide to handle the extra income's withholding. If short, raise it in writing with your state labor agency as backstop; accurate records win disputes.
A Two-Week Averaging Trap Example
An employer pays "biweekly salary" and claims 80 hours over two weeks needs no OT, but if week one is 50 and week two is 30, week one still owes 10 OT hours — averaging is illegal under federal rules. At $25/hour, that is 10 x $37.50 = $375 owed. The Overtime Calculator flags it; the exemption guide confirms you are covered, because exempt staff get no OT and the trap only bites nonexempt workers.
Your OT Verification Checklist
Each period, check: did any workweek exceed 40 hours (or 8/day in daily-OT states)? Are bonuses and commissions in the regular rate? Does the stub show the 1.5x premium? If a line is missing, recompute. The bonus guide distinguishes bonus types that count; the paystub guide decodes the lines so an omitted premium is caught in the period, not at year-end.
State Daily Overtime Matters Most
In California, over 8 hours in a day is OT and over 12 is double time, dwarfing the federal 40-hour rule; in most states only the weekly line applies. The California guide details the thresholds; the minimum wage guide maps which states add daily rules. The Net Pay Calculator models the net including the richer state OT so a California offer is priced honestly.
Keep Proof, Then Act
Log hours yourself and recompute OT; payroll errors favor the employer when unchallenged. Use the Overtime Pay Calculator as your check and the W-4 guide to handle the extra income's withholding. If short, raise it in writing with your state labor agency as backstop; accurate records win disputes, and a written claim starts the clock on any lookback the state allows.
Myths About Overtime
Myths: that two weeks can be averaged to dodge the 40-hour line (illegal under federal rules); that bonuses never affect OT (nondiscretionary ones raise the regular rate); and that exempt staff get OT (they do not). The exemption guide confirms coverage; the bonus guide distinguishes bonus types that count, so you can spot the common employer errors that quietly underpay nonexempt workers week after week.
Next Steps and the Calculators
Verify each check with the Overtime Pay Calculator and the paystub guide, and handle the extra income's withholding via the W-4. In daily-OT states the gap is larger — the California guide details the thresholds. If short, raise it in writing with your state labor agency as backstop; accurate records and a written claim protect the lookback period the state allows.
2026 at a Glance
For 2026, the federal rule is still 1.5x over 40 hours with no two-week averaging, the Social Security base is $184,500, and the 401(k) limit is $24,500; none of those change the OT math, but state daily-overtime rules — strongest in California — can dwarf the federal weekly line. Nondiscretionary bonuses and commissions enter the regular rate, so a strong month quietly raises your overtime too. Log hours yourself and verify the stub, because payroll errors favor the employer when unchallenged.
Key Takeaways
Federal overtime is 1.5x the regular rate over 40 hours per workweek, and the regular rate includes most bonuses and premiums. Some states (notably California) add daily overtime. Salaried nonexempt workers still qualify. Verify your own hours and regular rate, model with the Overtime Pay Calculator, and read the lines via the paystub guide.
Frequently Asked Questions
Related Reading
Figures are 2026 estimates for guidance only. See the 50 State Wage Guides for local detail.