In 2024, 80.3 million US workers were paid hourly, representing over 55% of all wage and salary workers, according to data from the US Department of Labor. If you have hourly employees on your payroll, especially those who work overtime, you need to understand what time-and-a-half pay is, the federal law that requires it, and how it’s calculated. Knowing which of your workers qualifies and when to pay it keeps confusion to a minimum when you cut paychecks.
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Key takeaways
- The Fair Labor Standards Act (FLSA) sets the standard overtime rate at time and a half, meaning you pay an employee 50 percent more than their regular rate.
- You are required to pay time and a half to any non-exempt employee who works over 40 hours in a single week.
- Calculating the time-and-a-half rate is as simple as multiplying your employee’s regular rate of pay by 1.5.
- Time and a half only applies to hours actually worked, meaning holiday pay and paid time off are left out of the equation.
- While typically applied to hourly workers, salaried employees are still eligible for overtime if their pay falls below the FLSA threshold of $684 per week.
In this article, we’ll cover what time and a half is, when you’re legally required to pay it, examples of how to calculate it, and some common mix-ups to avoid.
What is time and a half pay? Definition and purpose
Time and a half is the standard overtime rate under the Fair Labor Standards Act (FLSA), the federal law that sets overtime pay and eligibility requirements. You calculate overtime pay using an eligible employee’s regular rate of pay, which for most hourly workers is simply their hourly pay rate.
When you pay time and a half, you pay an employee 50% more than their regular rate for those hours. Only non-exempt employees are eligible for it. Most employees eligible for overtime are paid hourly, but a salaried employee may also qualify for overtime pay in some cases, which we’ll cover later in this article.
When should employers pay time and a half?
The FLSA considers 40 hours a regular workweek. Any non-exempt employee who works over 40 hours in a single week is eligible for time and a half on those extra hours. As an employer, this means if a non-exempt employee on your staff works more than 40 hours in a week, you’re required to pay time and a half.
Here’s a table to help you see when this applies.
| Scenario | What employers need to know |
| Workweek hours | Required for any non-exempt employee working more than 40 hours in a week per FLSA rules |
| Regular vs. holiday hours | Time and a half applies to hours worked, not to paid time off or holidays |
| Unauthorized overtime | Must still be paid, even if not pre-approved (address policy issues separately) |
| State-specific rules | Some states have daily overtime laws (e.g., California after 8 hours/day) so always check local regulations |
Now that we know when time and a half is due, let’s talk a bit about how the math works out.
How to figure out time and a half
Here’s the quick version: to calculate time and a half pay, you’ll use both:
- Your employee’s regular rate of pay – or what they are paid per hour
- Half of that hourly rate, added on top
For example, if you have an employee earning $15 per hour, you [multiply their regular pay rate by 1.5, and the total is the employee’s time and a half pay rate, which in this example comes out to $22.50.
Here’s the math:
- $15 (regular rate of pay) x 1.5 (time and a half) = $22.50 (overtime rate of pay)
We’ll walk through this step by step, including hourly and salaried employers, later in this article. But now that we’ve covered the basic math, let’s go over who qualifies and who doesn’t.
Related resource
Once you have a handle on time and a half, read our guide on shift differential pay to learn what it is and how some companies use it to encourage employees to work less desirable shifts.
Qualifying for time and a half: Which employees are eligible?
In the simplest terms, to be eligible for time and a half pay. Classifying employees correctly under FLSA guidelines is crucial because misclassified employees who don’t receive overtime expose employers to civil penalties of up to $2,515 per violation for willful or repeated violations. To start, it helps to understand the difference between exempt and nonexempt employees.
We have more on the topic below, but here’s a table to break down the differences.
| Category | Exempt employees | Nonexempt employees |
| Overtime eligibility | Ineligible for overtime pay | Must receive overtime for hours worked beyond 40 per week |
| Pay structure | Salaried; earn more than $35,568/year or $684/week | Usually hourly; can be salaried if below FLSA threshold |
| Covered by FLSA? | No (with specific exemptions) | Yes, covered |
| Examples | Professionals, administrative, computer, outside sales, managers, or highly-compensated employees | Retail associates, clerical staff, service workers, or lower-salaried employees. |
Exempt vs. nonexempt employees
The FLSA’s Handy Reference Guide provides helpful information on how to categorize employees and which categories can be considered exempt. There’s also a PDF download of the guide if you want to save a copy for your records.
What to know about exempt employees
Exempt employees are those who:
- Receive a salary (and aren’t covered by the FLSA, and in most cases don’t receive overtime pay)
- Earn more than $35,568 annually, which comes out to $684 per week
- Have specific job duties that are considered exempt (more on that below)
FLSA rules state that an employee needs to fall into one of the following six exemption categories to be considered exempt:
- Executive exemption for a number of positions, including management
- Administrative exemption, which includes office work directly related to management
- Professional exemption for employees whose work is intellectual in science or learning
- Computer employee exemption, which includes computer analysts, programmers, or software engineers
- Outside sales exemption for employees whose primary duty is to solicit and close sales
- Highly compensated employee exemption for those earning more than $107,432 annually for 2026
What to know about non-exempt employees
On the other hand, a non-exempt employee:
- Is covered by the FLSA and receives overtime pay for extra hours worked
- Is typically paid hourly, though salaried employees can be eligible for overtime if their pay falls below the FLSA threshold
- Doesn’t fall into one of the exempt categories above, which usually means they don’t have a position requiring high-level administrative, executive, computer, or professional duties
Keep in mind that federal law says that workers who clock in for more than 40 hours per week must be paid overtime. The US Department of Labor’s Wage and Hour Division recently fined a New Jersey employer for willfully denying overtime pay to many of their employees who worked more than 40 hours per week.
How to calculate overtime pay (plus examples)
Understanding the basics of overtime pay can be helpful, as employers sometimes need employees to work extra hours beyond a standard shift. The good news is that calculating overtime pay is simple when you follow a few basic steps.
- Calculate any hours worked over 40 for the week including only hours worked for that particular week. Don’t include sick, vacation, or holiday pay in hours worked.
- Determine the overtime pay for each eligible employee using the calculation above.
- Calculate the overtime pay for each employee by multiplying the total number of overtime hours by the overtime pay rate.
Here’s a table to visualize it:
| Step | What to do |
|---|---|
| 1. Identify regular hourly rate | Divide weekly pay by 40 hours (for full-time nonexempt employees). |
| 2. Determine overtime rate | Multiply the regular rate by 1.5 to get time and a half. |
| 3. Count qualifying hours | Include all hours worked over 40 in a workweek. Exclude PTO, holidays, or unpaid breaks. |
| 4. Calculate total overtime pay | Multiply overtime hours by the overtime rate and add to regular pay. |
Although this formula isn’t complicated, let’s test it with a fictional employee. We’ll look at both hourly and salaried examples.
Overtime calculation example for hourly employees
Let’s say you operate a niche business that manufactures laptop bags for sports fans, and Judith is a non-exempt employee on your staff, earning $20 an hour. Between your busy season approaching (and a well-timed interview on a national fan podcast), demand for your product is up, and you ask Judith if she can take on a few additional hours. She is happy to help.
If Judith worked 50 hours in one week, she’d be paid her regular hourly rate of $20 for the first 40 hours, and time and a half for the 10 overtime hours. To determine Jane’s overtime rate, use the following calculation:
- $20 (regular rate of pay) x 1.5 (time and a half percentage) = $30 (overtime rate of pay)
Now that we have Judith’s overtime rate figured out, the next step is multiplying it by the number of overtime hours worked.
- $30 (overtime rate of pay) x 10 (overtime hours worked) = $300 (total overtime pay)
So in this example, Judith earns an additional $300 in overtime pay for that week, which gets added to her regular pay. You can also try an hourly payroll software to keep the numbers in check.
Now that we’ve covered one of the most common overtime situations, let’s talk about one that happens less often.
Calculating a salaried worker’s overtime pay
Though it’s less common, there are instances when an employee receives a salary rather than an hourly wage and is still eligible for overtime. This happens when your employee fails to meet at least one of the two requirements for exempt status under FLSA rules:
- A minimum salary of at least $684 per week ($35,568 annually)
- Job duties that fall into one of the six overtime exemption categories
It’s also important to note that if you have salaried non-exempt employees, you should track their hours the same way you would for hourly employees.
Calculating overtime pay for salaried employees is similar to the process above, but it requires a few more steps to get the numbers right:
- Calculate hours worked over 40 for the week, including only hours worked for that particular week
- Calculate the employee’s weekly salary based on their annual salary
- Divide their weekly salary by 40 hours to determine their hourly rate
- Multiply that hourly rate by 1.5 to get their overtime rate
- Multiply the total number of overtime hours by the overtime pay rate
Now let’s apply the steps to a hypothetical scenario involving a salaried employee earning overtime.
Overtime calculation example for salaried employees
As mentioned, it takes a bit more math to calculate overtime pay for salaried, non-exempt employees. Let’s figure out the pay for Jim, a salaried employee who worked 47 hours (seven extra hours) last week and earns $32,000 a year. To determine his overtime rate, we first divide his annual salary by 52 to determine his weekly pay rate.
- $32,000 / 52 = $615.38 (Jim’s weekly salary)
Now that we have Jim’s weekly salary, the next step is dividing it by 40 hours to determine his hourly rate.
- $615.38 (Jim’s weekly salary) / 40 = $15.38 (Jim’s hourly rate)
Finally, we can calculate Jim’s overtime rate by multiplying his hourly rate by 1.5.
- $15.38 (Jim’s hourly rate) x 1.5 (time and a half) = $23.07 (Jim’s overtime rate)
Now we can calculate Jim’s overtime pay:
- 7 hours x $23.07 = $161.49
Jim receives his regular salary of $615.38 plus an additional $161.49 for overtime for the week.
Next, we’ll cover how the numbers work out when you have hourly workers putting in extra hours during the holiday season.
Overtime plus holiday pay
Companies aren’t required to pay time and a half to employees who work holidays, since holiday hours aren’t subject to the FLSA’s overtime regulations (although many employers extend it as a “thank you” for holiday work). It can get tricky when an employee qualifies for both overtime and holiday pay in the same workweek. In this case, you calculate overtime based only on hours worked, with holiday pay left out of the equation.
For example, if your employee takes 8 hours of holiday pay for Monday (and doesn’t work that day, then works 12-hour shifts the remaining four days of the week, they’d have 48 hours worked, making them eligible for 8 hours of overtime pay.
However, if they worked an 8-hour shift on the holiday itself, then worked four more 12-hour shifts, they’d have 56 hours actually worked, making them eligible for 16 hours of overtime pay.
Hold onto records
After learning everything there is to know about time and half, it’s a good idea to know which documents you need to hold onto. In our guide, we cover payroll recordkeeping rules employers should be aware of.
Can bonus pay be included in overtime?
Whether an employee is hourly or salaried, as long as they’re classified as non-exempt, the rules for including bonus pay in overtime are the same. Let’s take a look at how this works.
- Discretionary bonus: You give a discretionary bonus without any expectation on the employee’s part. Though it can be a welcome surprise for your team, you shouldn’t include it in overtime pay calculations. For example, a Christmas bonus is considered discretionary.
- Nondiscretionary bonus: A nondiscretionary bonus is generally tied to job performance, and an employee generally expects to receive it. The main difference is you can calculate a nondiscretionary bonus into the overtime calculation.
Similar to the examples earlier in this article, to account for a bonus in overtime pay, you add the bonus amount to the employee’s total wages for the week to get their regular rate of pay. Then you multiply the regular rate of pay by 1.5 to arrive at their overtime pay.
Time and a half mishaps to avoid
Though the basics of time and a half are straightforward, there are a few spots where an employer can slip up. Here’s some common payroll errors to keep in mind.
- Employee misclassification: Many employers mistakenly assume that paying an employee a salary rather than hourly automatically qualifies them for exemption. To actually be exempt under FLSA rules, employees must fall into one of the six categories covered earlier in this article.
- Inaccurately tracking hours: If you don’t track hours worked properly, you may underpay your employees, resulting in hefty fines and unwanted attention from the Department of Labor.
- Failure to pay for all hours worked: Employers sometimes assume that unauthorized overtime means they’re off the hook for paying it. But if staffers work extra hours, you need to pay them for it, whether you preauthorized it or not.
- Forgetting state or federal laws: While employers should be familiar with FLSA rules, it’s equally important to understand the rules in the state where they do business. For example, many states and jurisdictions have a higher minimum wage than the federal rate.
- Miscalculating the regular pay rate: Though fairly straightforward, calculating the regular pay rate when accounting for nondiscretionary bonuses can sometimes be confusing.
- Misunderstanding overtime’s tax treatment: Overtime pay is still fully subject to Social Security, Medicare, and federal and state withholding. Since 2026, employers must also separately report qualified overtime compensation on Form W-2, so don’t assume the new federal overtime tax deduction changes what you withhold or owe as an employer.
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— Mark Donati, Donati Family Vineyard, Inc
Bottom line: Employers should understand how time and a half works
Millions of hourly workers put in overtime hours each year, so it’s important to understand the ins and outs of time and a half, and how to calculate it correctly. Whether you rely on employees who regularly work more than 40 hours per week, or only occasionally need to cover extra hours, understanding the laws around overtime pay helps you stay compliant and keep your staff happy and productive.
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.