Overtime pay rewards employees for extra hours — and getting it wrong causes disputes and, sometimes, legal trouble. The calculation itself is simple once you know the rate and the rules. This guide shows how to calculate overtime pay, with an example.
What is overtime pay?
Overtime pay is the higher rate paid for hours worked beyond a standard threshold — often more than a set number of hours per day or week. It is usually a multiple of the normal hourly rate, such as time-and-a-half.
The overtime formula
The most common multiplier is 1.5 ("time and a half"), though some rules use 2 ("double time") for certain hours. The threshold and multiplier depend on your local laws and any employment agreement.
A worked example
An employee earns $20 an hour and works 6 overtime hours at time-and-a-half:
- Overtime rate = $20 × 1.5 = $30 per hour.
- Overtime pay = $30 × 6 = $180.
That $180 is added to their regular pay for the period.
Overtime rules vary
The threshold (for example, hours over 40 in a week), the multiplier, and who qualifies differ by country and sometimes by region or role. Always follow the rules that apply where you operate, and any contract terms — this guide explains the mechanics, not the law in your area.
Track overtime accurately
Correct overtime starts with correct hours. Reliable attendance tracking that captures actual start and finish times is what makes overtime — and the rest of payroll — accurate.
Overtime handled in payroll
RushFlow feeds recorded hours into payroll and applies your overtime rules, so overtime is calculated correctly and paid without manual maths each cycle.