Enter your normal pay rate, overtime pay multiplier, and total overtime hours worked to calculate the total overtime pay earned.
Overtime Formula
The following formula is used to calculate the total overtime pay:
OP = OH * NP * OR
- Where OP is the overtime pay
- OH is the total number of overtime hours worked
- NP is the normal pay rate
- OR is the overtime rate or overtime multiplier
Overtime Pay Definition
Overtime pay refers to the additional compensation that employees receive for working more than the standard working hours defined by their employer or mandated by labor laws. It is typically calculated at a higher rate, often 1.5 times the regular hourly wage, although this can vary depending on local regulations or employment contracts.
Overtime pay is important because it acknowledges and rewards the extra effort and time that employees put into their work beyond the regular working hours. It serves as an incentive for employees to take on additional tasks, work longer hours, or be available outside of their usual schedule when needed. Overtime pay also helps to ensure that employees are fairly compensated for their extra work, recognizing the potential impact on their work-life balance and personal commitments.
How to calculate overtime pay?
How to calculate overtime pay
- Determine your normal pay rate
Find your normal pay rate.
- Determine the total number of overtime hours worked
This is typically any number of hours worked over the normal 40 hour work week for hourly employees.
- Determine your overtime rate.
The overtime rate is also known as the overtime multiplier. It’s some multiple of your normal pay. For example time and a half is a multiplier of 1.5.
FAQ
Overtime pay is extra money earned from hours worked over what a worker is typically expected or contracted to work.
An overtime multiplier is a factor increase in pay over a normal rate. Double pay is a 2 times multiplier.
The number of overtime hours that a worker can work for one company is not set exactly. It can theoretically be as many hours as possible that is healthy for the employee.
