How to Calculate Overtime Pay: FLSA Formula with Examples

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Step 1: Determine the regular rate of pay

The regular rate is not always just your hourly wage. Under FLSA, it must include all remuneration for employment except certain exclusions (gifts, vacation pay, overtime premiums already paid).

What's included in the regular rate?

Hourly wages or salary
Non-discretionary bonuses (production bonuses, attendance bonuses)
Shift differentials
Commission payments
On-call pay

Basic overtime calculation

Regular Rate = Total compensation in workweek / Total hours worked Overtime Rate = Regular Rate × 1.5 Example: $800 salary + $200 bonus for 45-hour week Regular Rate = $1,000 / 45 = $22.22/hr Overtime Rate = $22.22 × 1.5 = $33.33/hr Overtime pay = $33.33 × 5 OT hours = $166.65

Fluctuating workweek method

Some employers use the fluctuating workweek method where a salary covers all straight-time hours. The overtime premium is only 0.5× (not 1.5×) because the salary already covers the straight-time portion. This must be clearly agreed upon and the employee must genuinely work varying hours.

Frequently Asked Questions

Tipped employees' regular rate must include tips in the calculation. The overtime premium must be based on the full regular rate (including tips), not just the cash wage. Many employers incorrectly calculate overtime for tipped workers.

Piece rate workers are entitled to overtime. The regular rate is calculated by dividing total piece rate earnings by total hours worked. The overtime premium of 0.5× is then paid for each overtime hour.

Generally no, if the break is a genuine relief from work (30+ minutes, free to use as the employee wishes). But if you're required to remain available or perform any duties during lunch, it likely counts as compensable time.

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