If I Get Paid $20 an Hour, How Much Is Overtime?

Overtime pay compensates employees who work beyond standard hours, ensuring they are paid at an increased rate for extended periods. This system aims to prevent overwork and encourages employers to manage staffing efficiently.

The Standard Overtime Rate

Federal law, specifically the Fair Labor Standards Act (FLSA), mandates overtime pay for eligible employees. This pay is calculated at one and one-half times (1.5x) an employee’s regular rate of pay. Overtime applies to all hours worked over 40 in a workweek. A “workweek” is defined as a fixed and regularly recurring period of 168 hours, consisting of seven consecutive 24-hour periods.

Calculating Overtime for Your Hourly Wage

For an employee earning a straightforward hourly wage, calculating overtime is a direct process. If you earn $20 per hour, your overtime rate is $20 multiplied by 1.5, resulting in $30 per hour for all overtime hours worked.

Consider a week where you work 50 hours. The first 40 hours would be paid at your regular rate of $20 per hour, totaling $800. The remaining 10 hours are overtime hours, compensated at $30 per hour, which equals $300. Your total earnings for that 50-hour workweek would be $1,100 ($800 + $300).

Understanding Your Regular Rate of Pay

The “regular rate of pay” is the foundation for calculating overtime, and it is not always simply an employee’s hourly wage. It includes all forms of compensation paid to an employee in a workweek, with some specific exclusions. Non-discretionary bonuses, shift differentials, and commissions must be factored into the regular rate. For instance, if an employee earns a $20 hourly wage and also receives a production bonus that averages an additional $2 per hour over the week, their regular rate for that week would become $22 per hour.

This adjusted regular rate is then used to calculate the overtime premium. The $22 per hour regular rate would be multiplied by 1.5 to determine the overtime rate of $33 per hour. Payments for expenses, vacation, holidays, or sick leave are typically excluded from the regular rate calculation.

Who is Eligible for Overtime Pay?

Overtime eligibility hinges on an employee’s classification under the FLSA, primarily distinguishing between “exempt” and “non-exempt” employees. Most hourly workers are classified as non-exempt, meaning they are entitled to overtime pay for hours worked beyond 40 in a workweek. Non-exempt employees perform operational functions and are subject to the FLSA’s overtime provisions.

Conversely, certain employees are considered “exempt” from overtime regulations. These include executive, administrative, professional, and outside sales employees who meet specific salary and duties tests. For example, an employee might be exempt if they earn a salary above a certain threshold and their primary duties involve managing a department or exercising independent judgment in professional work. Exempt employees do not receive additional pay for working more than 40 hours in a week.