How to Calculate Work Hours and Overtime Pay

Whether you're a salaried employee checking a timesheet or a freelancer billing by the hour, knowing how to calculate work hours correctly is fundamental — and overtime rules add a layer of complexity many employees miss.

Counting Basic Work Hours

Hours worked = clock-out time − clock-in time − unpaid breaks. Track daily totals, then sum for the week. Rounding: some employers round to the nearest quarter-hour (6 or 7 minutes threshold). Federal law allows rounding if it evens out over time — but it should never consistently benefit only the employer.

Overtime Thresholds

Under the US Fair Labor Standards Act (FLSA), non-exempt employees earn 1.5× their regular rate for hours exceeding 40 in a workweek. Some states (CA, AK, NV) also require daily overtime (1.5× after 8 hours/day, 2× after 12). Always check your state rules — they may be stricter than federal law.

Regular Rate of Pay for Overtime

If you receive a weekly bonus or multiple pay rates, your overtime base isn't just your hourly wage. The "regular rate" must include most non-discretionary bonuses divided across the workweek. Example: $20/hr × 45 hrs + $50 weekly bonus = ($900 + $50) ÷ 45 hrs = $21.11 regular rate → overtime premium is $10.56/hr for 5 OT hours.

Salaried Non-Exempt Employees

Being paid a salary doesn't automatically mean you're exempt from overtime. Employees earning below the FLSA salary threshold ($684/week as of 2024) may be entitled to overtime even on a salary. If your employer labels you "salaried" but your role is primarily non-exempt, you may have unclaimed overtime entitlement.