How Much Is Overtime Pay for $18 an Hour?
Understand how overtime pay is calculated for hourly workers. Learn about your regular rate of pay and ensure accurate earnings under federal law.
Overtime pay provides additional compensation for employees working beyond standard hours. Understanding how overtime is calculated is important for accurate payment, involving the base hourly wage and other forms of compensation that influence the final overtime rate.
Understanding Overtime Requirements
The Fair Labor Standards Act (FLSA) establishes federal regulations for minimum wage, overtime pay, recordkeeping, and child labor standards. For most non-exempt employees, the FLSA mandates overtime pay at one and one-half times their regular rate of pay for all hours worked over 40 in a single workweek.
An FLSA workweek is a fixed period of 168 hours or seven consecutive 24-hour periods. It does not have to align with the calendar week and can begin on any day and at any hour. Employers must calculate overtime based on hours worked within this defined workweek. Most employees are non-exempt and covered by these overtime provisions.
Certain employees are exempt from FLSA overtime requirements based on their job duties and salary level. Common exemptions include executive, administrative, professional, and outside sales employees, provided they meet specific criteria and are paid on a salary basis above a certain threshold. These exemptions are narrowly defined, and an employee must satisfy all criteria to be exempt from overtime. While federal law sets the minimum standard, some state laws may have stricter overtime rules.
Determining Your Regular Rate of Pay
The “regular rate of pay” is the hourly rate from which overtime compensation is calculated under the FLSA. It includes almost all remuneration paid to an employee for employment, with some exceptions. This ensures all forms of compensation are considered when determining the overtime rate.
Payments included in the regular rate are:
Non-discretionary bonuses, such as those tied to production goals or attendance incentives.
Commissions, whether based on sales or other metrics.
Shift differentials, which are extra payments for working less desirable hours.
Payments for on-call time, if they restrict an employee’s personal activities.
For example, if an employee earning $18 per hour receives a $50 bonus for meeting a weekly production quota, that bonus must be incorporated into the regular rate for that week.
Certain payments can be excluded from the regular rate:
Discretionary bonuses, which are spontaneous gifts not promised in advance or tied to performance.
Reimbursements for business expenses, such as travel costs.
Payments for vacation, holiday, or sick leave, where no work is performed.
Employer contributions to benefit plans, like health insurance or retirement plans.
Calculating Overtime for Your Hourly Wage
Calculating overtime begins with determining the regular rate of pay, which can be higher than the base hourly wage if other compensation is included. For an employee earning $18 per hour with no additional pay, the overtime rate is $27 per hour ($18 x 1.5).
If an employee works 45 hours in a week at $18 per hour, they earn $720 for the first 40 hours (40 hours x $18/hour). The remaining 5 hours are overtime, paid at $27 per hour, totaling $135 (5 hours x $27/hour). The total gross pay for that week would be $855 ($720 + $135).
The regular rate becomes more complex with non-discretionary payments. For example, if an employee works 45 hours at $18 per hour and receives a $100 non-discretionary production bonus, the regular rate must be recalculated. Total earnings for the week would be $910 ($810 regular pay + $100 bonus). To find the regular rate, divide total earnings by total hours worked: $910 / 45 hours = $20.22 per hour.
Once the new regular rate is established, the overtime premium is calculated. For the 5 overtime hours, the premium would be $50.55 (5 hours x $20.22 x 0.5). The total weekly pay would then be the regular earnings ($910) plus the overtime premium ($50.55), resulting in $960.55. The regular rate must be calculated for each workweek based on the compensation received during that period.
Receiving Overtime Pay
Overtime pay is integrated into an employee’s regular paycheck for the pay period in which the overtime hours were worked. Employers process all earnings, including regular wages and overtime premiums, through their standard payroll system.
Accurate timekeeping is important for correct overtime calculations and timely payment. Employers must maintain records of hours worked for all non-exempt employees. Employees should also keep their own records to verify pay accuracy.
Overtime earned within a workweek must be paid in the next regular paycheck covering that workweek. Employees should review their pay stubs to confirm that overtime hours and pay have been correctly calculated and included.
Should an employee identify discrepancies or have questions regarding their overtime pay, the first step is to contact their employer’s human resources or payroll department. These departments can clarify calculations, address errors, and provide detailed explanations. Resolving issues directly with the employer is the most efficient approach.