This overtime calculator is a tool that finds out how much you will earn if you have to stay longer at work. All you have to do is provide some information about your hourly wages, and it will calculate what is the total pay you will receive this month. Keep reading to learn useful information about overtime rules and overtime pay according to labor law regulations. What is more, you will discover what is the the time and a half pay, who is an exempt employee, and what are some examples of exempt jobs. Also, we prepared for you a step-by-step tutorial showing how to calculate the overtime pay. Scroll down to learn more!
Overtime - formal definition
Almost everybody is the working-age population knows and understands what is overtime. In some professions, working overtime is very common (or even mandatory!). Examples of personnel often working overtime might be construction workers, IT professionals, plant managers, and investment-related workers.
Besides all of that, let's take a look at the formal overtime definition. Overtime is the amount of time that an employee works beyond regular working hours. Or, in other words - overtime refers to any hours that someone worked exceeding their normally scheduled work-time. Moreover, the term overtime is often used to name the payment received for extra working hours.
Amount of normal working hours for a particular job position is established to balance the employee's health aspects, their productivity over the workday/shift, and general economic factors. It's known that the human organism is naturally limited and cannot sustain the same level of productivity in the 8th or 10th hour of work as at the beginning of the shift.
Depending on the job type, the number of normal working hours might be determined by the best practices of a profession (based on the trade experience), agreements between sides, or legislation. Whatever it is, it has to fulfill the national or local labor law regulations. Most commonly, a workday is 8 hours, and a workweek equals 40 hours.
Many countries design their labor laws to clearly prevent employees from being forced to work in long overtime hours. Furthermore, they usually provide regulations of compensation for overtime.
What is time and a half?
Overtime payments are commonly called the overtime premium or the overtime rate of pay. The most usual rate for overtime hours is time and a half, and that is 50% more than employee's standard wage. It means that for every hour of overtime, you receive an equivalent of 1.5 regular hourly rate. So, if you want to repair your personal budget, do some overtime work!
Keep in mind that this value may vary across countries and companies, so make sure to enter the correct multiplier into the overtime calculator.
According to the FLSA rules, nights, weekends or holidays do not require to be paid as overtime (unless the worker would cross the normal hours threshold). Many employers state additions to regular wages for hours done on evenings, weekends or holidays on their own.
Formulas for overtime pay
You can use some simple formulas to calculate the overtime salary. First of all, you have to calculate your hourly overtime wages:
HOP = HRP * m,
where HOP stands for hourly overtime pay, HRP for the hourly regular pay, and m for the multiplier (most typically 1.5).
Once you know this value, you can calculate your total overtime pay:
OP = HOP * n,
where OP is the overtime pay, and n is the number of overtime hours in a month.
Finally, if you want to find your total salary at the end of the month, you have to add it to your regular salary:
TP = OP + RP,
where TP stands for total pay and RP stands for regular pay. The second one is equal to the hourly regular pay multiplied by the number of working hours per month.
How to calculate overtime pay?
- Begin with specifying your regular pay. Let's assume you earn $10 an hour. Input this value into the overtime calculator. If you don't know what is is, you can use this salary to hourly calculator.
- The next step is determining the number of hours you normally work per month. Assuming four weeks, 40 hours each, you can enter 160 hours per month.
- Change the multiplier so that it corresponds to your company's overtime policy. For example, you company may pay the usual time and a half rate - the multiplier is equal to 1.5.
- Determine the number of hours you worked overtime this month. Let's say you worked 30 hours overtime.
- Our overtime will automatically find all other values - your regular pay, your overtime pay and their sum as the total salary you will receive this month.
Once you calculated your total pay, you can decide what to do with it - are you planning to spend it or maybe invest it?
Exemptions from overtime pay
Overtime laws obligate employers to pay their workers a rate that is greater than the standard wage for regular hours. As mentioned above, the typical threshold in most countries (including the U.S.) is 40 work hours a week. Whatever the limit is (some laws contain other thresholds), the employer should compensate each hour exceeding the normal threshold.
However, in the U.S., according to the Fair Labor Standards Act (FLSA), certain jobs are excluded from overtime compensation requirements. They are called exempt, and in these cases, employers are not obligated to pay them for overtime. Accordingly, employees who are normally eligible for overtime compensation are referred to as non-exempt employees. In addition to excluding particular workers from overtime rules, some overtime laws list certain industries where employers are exempt from overtime requirements.
Exempt employees - formal requirements
In the U.S., exempt jobs are determined by the Fair Labor Standards Act. There are many requirements to be fulfilled to consider an employee as an exempt one. Let's take a look at executive and administrative workers and how the exemption works for them.
To qualify for the executive employee exemption, all of the following tests must be met:
- The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week;
- The employee's primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
- The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
- The employee must have the authority to hire or fire other employees, or the employee's suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
To qualify for the administrative employee exemption, all of the following tests must be met:
- The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
- The employee's primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers; and
- The employee's primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
It might be misleading, so keep in mind that while someone gets a salary, it does not automatically determine them as exempt. That is a wrong simplification. A salaried employee might still be a non-exempt worker. Every individual has to perform qualifying duties to be classified as an exempt one.
Exempt jobs - examples
Below you can find a few others examples of job types that are excluded from overtime payments:
- Babysitters on a casual basis
- Companions for the elderly
- Fruit & vegetable transportation employees
- Local delivery drivers
- Newspaper delivery
- Police officers in departments with less than five officers
- Railroad employees
- Seamen on vessels
- Taxicab drivers