How Much Is Overtime Pay for $20 an Hour?

Overtime pay ensures hourly workers receive fair compensation for extended work hours. This additional pay compensates employees for their increased productivity and time commitment, and discourages employers from relying on excessively long hours. The Fair Labor Standards Act (FLSA) provides the federal framework for these protections, establishing minimum standards for overtime across the United States.

Calculating Overtime for Hourly Wages

Calculating overtime pay for an hourly wage, such as $20 per hour, involves a straightforward method under federal law. The FLSA mandates that eligible employees receive overtime pay at a rate of not less than one and a half times their regular rate of pay for all hours worked over 40 in a workweek. For example, if an employee earns $20 per hour, their overtime rate is $30 per hour ($20 x 1.5). If an employee works 45 hours in a workweek, the first 40 hours are paid at the regular $20 rate, and the remaining 5 hours are paid at the $30 overtime rate.

A “workweek” for overtime purposes is a fixed, regularly recurring period of 168 hours, consisting of seven consecutive 24-hour periods. This period does not need to align with the calendar week and can begin on any day and at any hour. Hours cannot be averaged over two or more workweeks; each workweek stands independently for overtime calculation.

Understanding the Regular Rate of Pay

While overtime calculation often appears simple, determining the “regular rate of pay” can be more complex than just the stated hourly wage. The regular rate includes all remuneration for employment, encompassing nearly all forms of payment an employee receives for their work.

Certain additional payments must be factored into the regular rate. These include non-discretionary bonuses, which are promised for meeting specific criteria like production goals. Other forms of compensation like shift differentials, commissions, and on-call pay also contribute to the regular rate. For instance, if an employee earns a $20 hourly wage and a non-discretionary bonus, the bonus amount must be included in their total weekly earnings before dividing by the total hours worked to find the true regular rate for that week.

Conversely, some payments can be excluded from the regular rate calculation. These include truly discretionary bonuses, where the employer has sole discretion over the decision to pay and the amount without prior agreement. Other excludable payments are gifts, expense reimbursements, and payments for periods when no work is performed, such as vacation or holiday pay. The overtime rate of 1.5 times is applied to this calculated regular rate, rather than just the base hourly wage.

Who is Eligible for Overtime Pay

Eligibility for overtime pay depends on an employee’s classification under the Fair Labor Standards Act. Employees are categorized as either “non-exempt” or “exempt.” Non-exempt employees are covered by the FLSA’s minimum wage and overtime provisions, meaning they are entitled to overtime pay for hours worked beyond 40 in a workweek. Most hourly wage earners fall into this non-exempt category.

Exempt employees are excluded from federal overtime requirements. This exemption applies to certain executive, administrative, professional, outside sales, and computer employees. To qualify for an exemption, employees must meet specific criteria related to their job duties and be paid on a salary basis at or above a certain threshold. As of January 1, 2025, the standard salary threshold for executive, administrative, and professional exemptions is $1,128 per week.

Beyond the salary threshold, exempt employees must also satisfy a “duties test” that specifies the type of work performed. An executive exemption, for example, requires managing an enterprise or department and directing the work of at least two full-time employees, along with the authority to hire or fire. A computer employee exemption requires specific duties like systems analysis or software engineering, and can be met by either the salary threshold or an hourly rate of at least $27.63. Job titles alone do not determine exempt status; actual duties performed and compensation structure are the determining factors.

State and Local Overtime Laws

While the FLSA sets the federal minimum standard for overtime, individual states and some local jurisdictions can enact their own laws that provide greater benefits to employees. When federal and state laws differ, employers must follow the law that offers the employee the greater benefit.

State laws might introduce variations such as daily overtime requirements. For example, some states mandate overtime pay for hours worked beyond eight in a single workday, regardless of the total hours worked in the workweek. Other state-specific rules could include higher overtime rates for certain industries or for working a seventh consecutive day in a workweek. Understanding specific regulations based on geographic location is important to ensure full compliance and proper compensation.