What is overtime wages — and how do you calculate it for salaried non-exempt employees?

[Albert]

I know what is overtime wages for hourly workers — 1.5x after 40 hours — but I'm less clear on how to calculate it for salaried non-exempt staff. Are the formulas different, and what are the most common payroll mistakes teams make when processing overtime pay?

 

[samuel]

For hourly workers it's simple, 1.5x after 40 hours, but for salaried non-exempt you divide the weekly salary by hours worked to get a regular rate, then pay 0.5x that rate for each overtime hour on top of the salary already paid.

 

[William]

For salaried non-exempt employees, calculating overtime wages can be a bit more complex than for hourly workers. First, you need to determine the employee's regular rate of pay, which is typically their annual salary divided by the number of weeks they work in a year, and then divided by the number of hours they're expected to work in a week. Once you have that, you can calculate their overtime rate, which is 1.5 times their regular rate, and pay them that rate for any hours worked over 40 in a week. A common mistake teams make is not accurately tracking hours worked or misclassifying employees as exempt when they should be non-exempt, so it's crucial to stay on top of records and classifications to avoid errors.

 

[Tight Eyez]

Overtime wages are the extra pay salaried non-exempt employees earn when they work more than the legal overtime threshold commonly over 40 hours in a workweek under U.S. federal law. To calculate it, first find the employee’s weekly salary equivalent, divide it by total hours the salary is meant to cover (usually 40) to get the regular hourly rate, then multiply overtime hours by 1.5 times that hourly rate. For example, if a salaried employee earns $800 a week for 40 hours, their regular rate is $20/hour, so overtime pay is $30/hour for each hour over 40.