What is Overtime?
Overtime is time worked by an employee in excess of their regular working hours. In the United States, non-exempt employees are typically eligible for overtime pay, while exempt employees are not.
The Fair Labor Standards Act (FLSA) sets the standard workweek at 40 hours. Employees who work more than 40 hours in a workweek are entitled to overtime pay. Overtime pay is calculated at one and one-half times the employee’s regular pay rate.
Exempt employees are not entitled to overtime pay. Exempt employees are typically salaried employees who have a high degree of discretion and independent judgment in their work.
Example of Overtime calculations:
| Hours worked | Regular Rate | Overtime Rate | Total Pay |
|---|---|---|---|
| 40 | $16 | $0 | $640 |
| 10 | $0 | $24 | $240 |
| Total | $880 |
Businesses must track overtime hours and comply with the FLSA by paying employees accurately. Failure to pay overtime wages can result in legal penalties.
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