We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is the Overtime Rate?

Jessica Ellis
By
Updated Jan 22, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

The overtime rate is a term that may be used to describe two distinct calculations. In the first instance, the overtime rate is the amount of additional pay a worker is owed for working more hours than are legally specified over a period of time. The overtime rate also describes how many overtime hours employees are putting in, versus how many hours were planned by the employer for completing work.

Overtime rate in terms of pay is a somewhat confusing issue. Most regions have laws specifying how many hours are in a normal work week; for instance, in some places, 40 hours in a seven day period is considered a normal work week. In many areas, if a person works more than 40 hours a week it is considered overtime and must legally be paid a premium wage. The premium is generally 1.5 to two times the amount of the normal hourly wage for the worker.

Thus, if a worker gets paid $10 US Dollars (USD) per hour and works 45 hours in a week, five of those hours would be charged at an overtime rate of $15-$20 USD, depending on the legally mandated overtime rate. If the rate was 1.5 normal pay for overtime, the worker would make $400 for the first 40 hours and $75 for the overtime hours for a total of $475 USD for the week. If the worker was paid his or her normal rate for the entire time, the total would be $450 USD.

The other use of the term relates to how a business measures performance and potential need for expansion or contraction of the workforce. Calculating the overtime rate in this situation becomes a ratio of hours actually worked versus hours allotted for a job. Paying a worker 1.5 to two times his or her normal rate for overtime may be a necessary expense in some cases; such as to deal with an unusually large job or finish an important project before a set deadline. Over a long period of time, however, consistent overtime hours can begin to take a toll on the financial health of a business.

By measuring the ratio rate, employers can get an idea of the reality of hours as compared to what is assumed will be enough time. If a small office has two full-time workers who both end up working 20 hours of overtime every week, the company is paying out 40 hours of the higher overtime salary every week. A smart business move in this situation might be to hire a third full-time worker, since paying an additional 40 hours at the regular rate to a third worker will cost less than paying 40 hours of overtime to the two original workers.

A high overtime rate ratio can be negative for several other reasons besides additional costs. Constantly overtaxing employees by requesting or requiring overtime can lead to a serious drop in morale, even when higher wages are provided for extra work. Workers may become exhausted and emotionally stressed, leading to higher rates of illness or potential for injury and critical mistakes. Keeping the overtime rate ratio low can help ensure worker accuracy, morale, and safety.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Jessica Ellis
By Jessica Ellis
With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica Ellis brings a unique perspective to her work as a writer for WiseGeek. While passionate about drama and film, Jessica enjoys learning and writing about a wide range of topics, creating content that is both informative and engaging for readers.
Discussion Comments
By Sporkasia — On Feb 01, 2015

When I was younger, I worked at a family fitness center. I managed the youth recreational leagues and planned other activities for the children. The center refused to pay overtime to anyone for anything, but they did give out comp hours freely. I commonly worked 60-plus-hour weeks, and I accumulated a large number of comp hours.

This was great for me because I loved having the freedom to take the time off and still be paid. I didn't earn extra time for overtime, but I was still okay with the situation.

By Feryll — On Feb 01, 2015

I thought the overtime rate was a universal law. Well, I at least thought there were federal labor laws guaranteeing overtime pay at a certain rate. When I was in college, I worked two 12-hour weekend shifts, one on Friday staring at 3 p.m and another on Saturday starting at noon. I was paid double time and got paid almost as much as the people working five days a week on the 8-hour shifts. The company paid double time for all overtime and weekend work.

By Drentel — On Jan 31, 2015

I agree with what this article says about working a lot of overtime leading to an employee being tired and losing his enthusiasm for coming to work. On my first job, I was working six days a week on third shift. I would go into work at 11 o'clock on Sunday night to start the week, and my final shift of the week ended at 7 o'clock on Saturday morning, so I was working 48 hours a week and getting paid for 52 hours because of time-and-a-half pay for overtime.

All I did on my day and night off was sleep. Basically, all I was doing was sleeping and working. This was made worse because I was working third shift, but the bottom line is that a schedule like this for months is going to drain anyone, no matter how much you are paying them.

Jessica Ellis
Jessica Ellis
With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica Ellis...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.