Overtime pay calculation

If you are an hourly or salary/non-exempt employee, you may get paid a little extra working overtime. The rate used for overtime pay varies depending on your payroll schedule and how many pay rates you have:

View the scenario below that best fits your situation.

One Pay Rate, All Pay Schedules

This overtime pay calculation applies to all hourly employees that have only one pay rate. 

Calculating Gross Wages with Overtime Example Calculation for Regular Overtime

Regular Pay: First multiply your regular hours (overtime hours not included) worked by your regular pay rate to get your regular pay.

Overtime Pay: Calculate the overtime rate by first multiplying your regular pay rate by 1.5 (for regular overtime) or 2 (for double overtime). Multiply this overtime rate by the amount of overtime hours to get the overtime pay

Gross Wages: Adding the overtime pay with your regular pay will give your total gross wages for the pay period.

Your employee works 40 regular hours a week at $20 per hour. She decides to work an additional 10 hours in overtime. The following calculation will be used for gross wages:

40 regular hours x $20 regular pay rate = $800 regular pay
10 regular OT hours x ($20 regular pay rate x 1.5) = $300 OT pay
$800 regular pay + $300 regular OT pay = $1,100 total gross wages

Multiple Pay Rates, Weekly Pay Schedule

This overtime pay calculation applies to hourly employees that have multiple pay rates and uses a weekly company pay schedule.

Overtime will be calculated using a regular rate of pay based on the weighted average rate. Please see more details on this calculation with the Department of Labor here.

Calculating Gross Wages with Overtime Example Calculation for Regular Overtime

Regular Pay: First multiply each job rate by the number of job hours worked (overtime hours included), and adding these amounts together. This will give your regular pay amount.

Overtime Pay: Calculate your additional overtime amount by first dividing your regular pay by the total hours worked in the pay period (overtime hours included). This will give you the weighted average rate. Multiply this weighted average rate by 50% (for regular overtime) or 100% (for double overtime), and then multiply this rate by the amount of overtime hours to get the additional overtime pay.

Gross Wages: Adding the overtime pay with your regular pay will give your total gross wages for the pay period.

Your employee works as a waiter 30 regular hours a week at $15 per hour. He also works as a bartender 10 regular hours a week at $12 per hour. He decides to work an additional 10 hours as a bartender in overtime. The following calculation will be used for gross wages:

30 regular waiter hours x $15 waiter rate = $450 waiter pay
(10 regular bartender hours + 10 OT bartender hours) x $12 bartender rate = $240 bartender pay
$450 waiter pay + $240 bartender pay = $690 regular pay

$690 regular pay / 50 total hours worked = $13.80 weighted average rate
($13.80 weighted average x 50%) x 10 OT hours = $69 OT pay

$690 regular pay + $69 OT pay = $759 total gross wages

Multiple Pay Rates, Non-Weekly Pay Schedule

This overtime pay calculation applies to hourly employees that have multiple pay rates and uses a non-weekly (bi-weekly, semi-monthly, or monthly) company pay schedule.

Overtime will be calculated using the highest job rate for hours worked. If you do not work one of your job types during the pay period, this rate will not be considered in the OT calculation. Because Gusto does not collect hours for each week on a non-weekly schedule, this is the most compliant way to calculate OT hours based off of Fair Labor Standard Act (FLSA) requirements.

Calculating Gross Wages with Overtime Example Calculation for Regular Overtime

Regular Pay: First multiply each job rate by the number of job hours worked (overtime hours included), and adding these amounts together. This will give your regular pay amount.

Overtime Pay: Calculate your additional overtime amount by first multiplying the highest worked pay rate by 50% (for regular overtime) or 100% (for double overtime). Multiply this rate by the amount of overtime hours to get the additional overtime pay.

Gross Wages: Adding the overtime pay with your regular pay will give your total gross wages for the pay period.

Your employee works as a waiter 60 regular hours biweekly at $15 per hour. He also works as a bartender 20 regular hours biweekly at $12 per hour. He decides to work an additional 10 hours as a bartender in overtime. The following calculation will be used for gross wages:

60 regular waiter hours x $15 waiter rate = $900 waiter pay
(20 regular bartender hours + 10 OT bartender hours) x $12 bartender rate = $360 bartender pay
$900 waiter pay + $360 bartender pay = $1,260 regular pay

($15 highest pay rate x 50%) X 10 OT bartender hours = $75 OT pay

$1,260 regular pay + $75 OT pay = $1,335 total gross wages

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