Overtime Cost Calculator
Overtime pay is governed by the Fair Labor Standards Act, which requires employers to pay non-exempt employees at least 1.5 times their regular rate for all hours worked over 40 in a workweek. Understanding the true cost of overtime is critical for operations and finance teams planning staffing levels. This calculator computes the regular pay, overtime premium, and total weekly labor cost for an employee working overtime hours, then projects the annual overtime spend if the current pattern continues. It also shows the overtime pay rate to help managers compare the cost of overtime versus adding headcount.
FLSA overtime formula
Overtime Rate = Regular Rate * 1.5
Weekly OT Cost Per Employee = OT Hours * OT Rate
Total Weekly Cost = (Regular Hours * Regular Rate + OT Hours * OT Rate) * Employees
Annual OT Cost = Weekly OT Cost Per Employee * Employees * 52
FLSA overtime key rules
- Overtime threshold: 40 hours per workweek (federal standard).
- Overtime rate: at least 1.5x the regular rate of pay.
- California daily overtime: 1.5x for hours 8 to 12 per day; 2x for hours over 12.
- Salary threshold for non-exemption: $684/week as of July 2024 (verify current rates with the DOL).
Overtime: frequently asked questions
How is overtime pay calculated under the FLSA?
Under the Fair Labor Standards Act, non-exempt employees must receive at least 1.5 times their regular rate of pay for all hours worked over 40 in a workweek. The regular rate includes base pay plus most forms of additional compensation such as production bonuses.
What is the FLSA overtime salary threshold?
As of July 1, 2024, employees earning less than $684 per week ($35,568 per year) are generally non-exempt and entitled to overtime pay. Some state laws have higher thresholds. Always verify current thresholds with the Department of Labor.
Who is exempt from overtime under the FLSA?
Executive, administrative, and professional employees who meet salary and duties tests are exempt. Computer employees, outside sales workers, and highly compensated employees (earning over $107,432 per year) may also be exempt.
How does double time differ from overtime?
Standard FLSA overtime is time-and-a-half (1.5x rate) for hours over 40 per week. Double time (2x rate) is not required by federal law but is required in some states (California requires double time for hours over 12 in a day) or specified by collective bargaining agreements.
What is the true cost of overtime vs hiring?
Overtime avoids benefits overhead on new hires but pays 1.5x the base rate. Once overtime hours exceed 15 to 20% of regular hours, it is often cheaper to hire additional part-time or full-time employees, especially when accounting for productivity decline from overwork.
Sources
- U.S. Department of Labor: FLSA Overtime Pay.
- U.S. Department of Labor: Fair Labor Standards Act.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.