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Overtime Pay
Definition
Overtime pay is additional compensation for hours worked beyond the standard 40-hour workweek, typically at 1.5 times the regular hourly rate.
Explanation
Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive overtime pay at 1.5 times their regular rate for hours worked beyond 40 in a workweek. Some states have additional overtime laws. Salaried employees in professional, administrative, or executive roles are typically exempt.
Overtime significantly increases earnings for eligible workers and is an important factor in financial planning for hourly employees.
Example
An employee earning $20/hour working 10 hours of overtime in a week earns $300 in overtime pay ($20 x 1.5 x 10 hours) on top of regular wages.