What Is Overtime Pay for $22 an Hour?

Overtime pay serves as a financial incentive and a legal requirement to compensate employees for working beyond standard hours. Its purpose is to ensure fair remuneration for extended workweeks, acknowledging the additional effort and time commitment involved. This compensation is calculated at a higher rate than an employee’s regular hourly wage. Understanding overtime pay helps both employees and employers navigate wage and hour laws, ensuring compliance and proper compensation.

Understanding Overtime Hours

Overtime hours are defined under the Fair Labor Standards Act (FLSA) as all hours worked over 40 in a single workweek. The FLSA mandates that non-exempt employees receive overtime pay for these additional hours. A “workweek” is a fixed and regularly recurring period of 168 hours, consisting of seven consecutive 24-hour periods. This period does not have to align with the calendar week, but once established by an employer, it remains fixed.

Only actual hours worked count towards the 40-hour threshold. This includes time spent performing job duties, attending required meetings or training, and certain waiting or on-call time where an employee’s personal activities are restricted. While federal law focuses on the weekly threshold, some states may have additional regulations, such as daily overtime rules, which require overtime pay for hours exceeding a certain limit within a single workday, regardless of the total weekly hours.

Calculating Your Overtime Pay

For an employee earning a base hourly wage of $22, overtime pay involves multiplying this rate by 1.5. This yields an overtime rate of $33 per hour ($22 x 1.5 = $33). This time-and-a-half rate applies to all hours worked beyond the standard 40 hours in a workweek.

The actual overtime rate, however, is not always simply 1.5 times the base hourly wage; it is calculated based on the “regular rate of pay.” The regular rate includes nearly all forms of compensation paid to an employee, not just the base hourly wage. This calculation ensures that all eligible earnings contribute to the higher overtime rate. Components included in the regular rate are non-discretionary bonuses, such as those tied to performance or production, commissions, shift differentials, and on-call pay. For example, if an employee receives a non-discretionary production bonus, that bonus amount must be factored into their total weekly earnings before calculating the regular rate, potentially raising it above $22 per hour and thus increasing the overtime pay.

Conversely, certain payments are excluded from the regular rate calculation. These exclusions include discretionary bonuses, which are not promised in advance, gifts, payments for expenses incurred on the employer’s behalf, and payments for periods when no work is performed, such as vacation, holiday, or sick pay. Premium pay for working weekends, holidays, or regular days of rest is also excluded, provided these premiums are at least 1.5 times the regular rate for non-overtime hours. Therefore, a $22 hourly employee might find their effective regular rate, and consequently their overtime pay, to be higher than $33 if additional forms of compensation are present.

Overtime Exemptions

Not all employees are entitled to overtime pay. The FLSA provides specific exemptions, often referred to as “white-collar” exemptions, for certain types of employees. These exemptions apply to bona fide executive, administrative, professional, outside sales, and certain computer employees. To qualify for an exemption, an employee must meet both a salary basis test and a duties test.

The salary basis test requires that an employee be paid a fixed salary that is not subject to reduction based on the quality or quantity of work performed. As of November 15, 2024, the federal minimum salary threshold for these exemptions is $684 per week, which equates to $35,568 annually, following a court ruling that blocked planned increases. Beyond the salary requirement, the employee’s primary duties must align with the specific responsibilities outlined for each exemption category.

The FLSA outlines specific duties tests for each exemption:
Executive exemption: Requires managing the enterprise or a recognized department and supervising at least two full-time employees.
Administrative exemption: Applies to employees performing office or non-manual work directly related to management or general business operations, involving discretion and independent judgment.
Professional exemptions: Require advanced knowledge in a field of science or learning, acquired through specialized intellectual instruction.
Outside sales employees: Must primarily make sales and customarily work away from the employer’s place of business, with no salary requirement for this exemption.
Computer employee exemption: Applies to systems analysts, programmers, or similarly skilled workers performing specific duties. They may be paid on an hourly basis at a rate not less than $27.63 per hour, or on a salary basis.
Job titles alone do not determine exempt status; the actual job duties and compensation must meet all criteria.