Overtime Calculator

How much do employees cost beyond their standard wages?
Answer the questions below to calculate the full cost of a new hire.


Overtime Calculators Explained

If your business is going well, then you might need your team to work extra hours to meet project deadlines. In America and most other countries, the standard workweek is 40 hours, but many work an average of 60 hours a week. Statistics from The World Economic Forum show that Americans work an average of 1,783 hours a year which is more than British or Japanese people. 

Rules are in place to make sure that employees working more hours than stated in their contract will receive overtime. As an employer, you have to pay your team members for every extra hour they work. Luckily, Future Fuel has a helpful overtime calculator you can use. 

How to Calculate Overtime

Federal overtime laws state that you must pay employees one and a half times their usual wage for overtime. If your employees’ usual rate is $15 per hour, their overtime pay would be $22.50. We recommend you use our paycheck calculator with overtime to ensure you pay each employee the right amount, but here’s how to calculate overtime pay.

Regular pay rate X 40 Hours  + Regular rate X 1.5 X 10 Hours of work = Take-Home Pay

Do I Need to Pay Overtime?

You’ve finally landed a big client and look forward to the financial gains you’ll receive, but then you see how much overtime is costing you. It’s easy to see why you wouldn’t want to pay overtime, but the law states you have to.

The Fair Labor Standards Act states that employers are legally obliged to pay their employees overtime if they work over 40 hours a week. The overtime rate must be at least one and a half times their usual hourly wage and employers that fail to adhere to these rules will face legal action. 

Overtime Pay By State

In these cases, employers can use an overtime payment calculator to work out how much they should pay their employees. It’s also important to remember that your staff will owe tax on the overtime they’re given. Using an overtime tax calculator can make the payment process a lot easier and save you a few headaches!

In the US, some states have their own overtime law besides federal law. However, as an employer, you must pay your employees according to the law that gives them the highest overtime rates. Most states have a weekly overtime law, meaning they must pay their employees 1.5 times but some offer daily overtime too.

California Overtime Laws

California has state laws on overtime, so you should work any payments out with a California overtime calculator. The state allows employees daily overtime and weekly overtime. For example, if your employee worked nine hours on a Monday, they would be entitled to an hour’s overtime. 

If an employee works over eight hours, they are entitled to one and a half times their usual hourly rate. However, if they exceed 12 hours, then you must pay double their hourly rate. Further to this, employees that work seven consecutive days must receive 1.5 times their rate during the seventh day. 

Are There Exemptions?

If you’re worried about how much overtime you’ll have to pay, then it’s important to understand that the law doesn’t apply to all employees. In fact, there are some exemptions based on earnings. 

Salaried employees that earn $23,660 annually or $455 per week are exempt from overtime pay by FLSA guidelines. Exemptions can apply depending on which industry you work in. Seasonal workers and commission-based earners have no entitlement to overtime pay. Other industries include: 

  • Rail & Motor Carriers
  • Radio & Television Stations
  • Agricultural Workers 
  • Vehicle Drivers

It’s important to note that sometimes, meeting the threshold doesn’t mean automatic exemption. If you’re unsure whether your employee should receive overtime pay, this useful guide can help. 

Non-Exempt Rules

As we discussed before if your employees earn less than $23,600 annually, they are non-exempt from overtime laws. It makes no difference if you put your team on an hourly wage or salary; the FLSA protects them and ensures they receive the minimum amount of overtime. 

The Department of Labor is proposing changes to the current FLSA guidelines, and if these take effect, it might impact your business. 

Potential Changes for Overtime Pay

As things stand, employees who earn over $23,600 a year are exempt from overtime pay laws. However, the cost of living in the USA continues to rise and The Department of Labor is proposing the exemption limit is raised to $35,308 per year. 

If governing bodies accept the changes, they’ll most likely come into effect by January 2020. A higher threshold might affect your business, but the Department of Labor recognises that the current threshold is very low and doesn’t benefit employees. 

Why is Overtime Pay Important?

We often see overtime pay as advantageous for employees but not for the business. While we can understand why you might agree, the fact is paying overtime has many benefits for employers too. 

More Productivity 

Employees get more money for working overtime, but in return, they offer higher levels of productivity. If you know how to use overtime to maximize your operational potential, you could achieve high-profit levels, which make up for overtime costs. 

If your employees work faster, you’ll impress your clients and get more business from them. Overtime also gives you a head start with your competitors, so it can be beneficial. 

Long-Term Savings

If you look at FutureFuel’s employee cost calculator, you’ll see how expensive it is to hire and train new team members. In most cases, the amount of overtime you’ll pay is less than the cost of hiring more employees. 

Overtime is ideal when you need to cover absences, or if you work on a variety of contracts. One contract might only last two months and hiring an extra employee isn’t beneficial when you can’t justify the long-term costs. 

More Pro-Active Employees 

Overtime is a great incentive for employees to work harder, and many appreciate the financial rewards. Business owners sometimes have to turn to agencies for their staffing needs, but this costs a lot of money. You should always ask your employees to work overtime whenever possible because it saves your money and allows your staff to earn some extra cash. 

As you can see, overtime has benefits for both parties involved. As an employer or manager, your job is to make sure you pay employees the right amount of overtime and adhere to the exemption guidelines.