Finance guide
Overtime Pay: How Premium Rates Work
Understand time-and-a-half, double time, and how overtime rules apply to hourly, salaried, and shift workers.
Written by James — Founder & Builder, BoringToolsKit · Published 2026 · Planning information, not professional advice.
The standard rule: time and a half
Under federal law, nonexempt workers earn at least 1.5 times their regular rate for hours over 40 in a workweek. A $20-per-hour employee working 45 hours earns $800 for the first 40 hours plus $150 for 5 overtime hours — $950 total for the week.
The regular rate is more than the base wage
The overtime rate is based on the regular rate, which includes most bonuses, commissions, and piece rates divided by total hours. If a weekly $100 production bonus is earned during a 45-hour week, the regular rate rises and so does the overtime premium. State rules can add daily overtime thresholds and double time for long shifts.
Salaried doesn't automatically mean exempt
Salary alone does not make an employee exempt from overtime. Exemption depends on duties and the salary threshold. An exempt executive, administrative, or professional employee is paid a salary and is not owed overtime; a nonexempt salaried employee is still owed premium pay for hours over 40.
Shift differentials and double time
Many employers add a shift differential — a premium for nights or weekends — on top of the base rate, and some states require double time after 12 hours or 60 hours. The calculator lets you model a differential and a multiplier so the estimate matches your actual pay structure.
Check the estimate against your stub
An overtime estimate is a planning tool, not a wage claim. Compare it with your pay stub, and if the numbers differ, ask payroll how the regular rate and premium were computed. For disputes, the Department of Labor's Wage and Hour Division handles wage claims.
Daily overtime in some states
Federal law counts overtime weekly, but several states require daily overtime — typically time and a half after 8 hours and double time after 12. California is the best-known example. If you work in a state with daily rules, the calculator's multiplier model still works: set the threshold and multiplier to your state's rule.
Worked example with a bonus
Bonuses change the regular rate. Suppose $20 per hour, 45 hours in the week, and a $100 production bonus: the regular rate is ($900 wages + $100 bonus) divided by 45 hours, or $22.22. Overtime pay is half the regular rate for each overtime hour — 0.5 × $22.22 × 5 = $55.56 — on top of the straight-time $1,000. Total: about $1,055.56. Without the bonus it would be $950. The calculator's inputs let you model that difference.
Exempt status is a test, not a title
Exemption from overtime is a duties-and-threshold test, not a job title. Executives, administrators, and professionals qualify only if their primary duties match the role and their salary clears the federal threshold. Job titles like 'manager' or 'salaried' do not decide it; the actual duties and the salary level do. The threshold changes over time and some states set their own higher minimums.
Common mistakes
Assuming salaried means exempt, or that a title decides it. Forgetting to include bonuses and commissions in the regular rate. Missing state daily-overtime rules when the federal weekly standard does not apply. And trusting the first number you see without checking the pay stub — a midweek holiday, unpaid break, or split shift can change the overtime calculation.
Decision checklist
Confirm your exempt status against the actual duties and the current threshold, not your title. Identify which overtime standard applies: federal weekly, your state's daily rule, or a union agreement. Compute the regular rate including bonuses and commissions. Track hours with your own log and compare the premium against the stub. Use the calculator to estimate, then verify — the tool is a planning aid, not a wage claim.
Holidays, paid time off, and the workweek
Overtime is computed per workweek, and paid time off does not count as hours worked for the overtime threshold. A week with a paid holiday: 32 hours worked plus 8 hours of holiday pay is still 32 worked hours, so no overtime unless the actual hours pass 40. That distinction matters for your own tracking — count hours worked, not hours paid, when estimating the premium.
Piece rates and tipped employees
Piece-rate workers — paid per unit, not per hour — still earn overtime. Their regular rate is total earnings for the week divided by total hours, and overtime is half that rate per overtime hour, or an agreement that meets the standard. Tipped employees have a lower cash minimum wage but the employer must make up the difference so the tip credit plus cash reaches the full minimum, and overtime applies on top of the regular rate.