How overtime is calculated under each pay frequency
The seven-day workweek rule under the FLSA, the regular-rate calculation, and how semi-monthly pay periods complicate it.
The Fair Labor Standards Act (29 U.S.C. §207) requires non-exempt employees to be paid 1.5 times their regular rate of pay for all hours worked over 40 in a defined seven-day workweek. The rule is short, but its interaction with biweekly and semi-monthly payroll causes more wage-and-hour mistakes than any other single payroll concept. This guide walks through the math.
The seven-day workweek
The FLSA workweek is a fixed, recurring 168-hour period — seven consecutive 24-hour days. The employer chooses which day of the week the workweek starts (most pick Sunday or Monday), but once chosen the workweek is fixed and applies uniformly to every non-exempt employee at the worksite. The workweek is independent of the pay period and independent of the calendar week. You cannot redefine the workweek every pay period to minimize overtime, and you cannot average hours across workweeks (no, working 30 hours one week and 50 the next does not avoid 10 hours of overtime).
Overtime under biweekly payroll
Every biweekly pay period covers exactly two seven-day workweeks. To compute overtime, sum the hours worked in each workweek separately, subtract 40, and pay the excess at 1.5× the regular rate. Then sum the two workweeks' overtime hours and add the total to the period's gross pay. The arithmetic is mechanical and, more importantly, it's transparent to the employee — the pay stub can show "Workweek 1: 42 hours, 2 OT; Workweek 2: 38 hours, 0 OT" and the calculation matches what the employee saw on their time card.
Overtime under semi-monthly payroll
Semi-monthly periods don't align to whole workweeks. A first-half pay period (1st through 15th) might contain two complete workweeks plus a partial week; a second-half period (16th through end-of-month) might contain three partial workweeks plus a complete one. To compute overtime correctly, you have to maintain a parallel seven-day workweek schedule alongside the pay period and pay the resulting overtime in the period that contains the workweek's pay date. The bookkeeping is straightforward but requires either payroll software that handles split workweeks correctly or a meticulous spreadsheet.
The regular rate trap
The "regular rate" is not just the hourly wage. It includes most non-discretionary bonuses, shift differentials, on-call pay, and commissions earned during the workweek. If a non-exempt employee earns a $100 production bonus in a workweek where they worked 50 hours, the bonus has to be apportioned across the 50 hours ($2/hour) and added to the regular rate before computing overtime. The result: $2/hour × 0.5 (the overtime premium) × 10 overtime hours = $10 of additional overtime owed on top of the bonus. Payroll software that calculates the regular rate correctly is the easiest way to avoid this trap.
State overtime variations
Several states impose stricter overtime rules than the federal FLSA: California requires daily overtime over 8 hours and double-time over 12; Alaska requires daily overtime over 8; Colorado requires both daily overtime over 12 and weekly over 40; Nevada has a low-wage daily overtime rule; Kentucky and Minnesota have weekly rules slightly different from federal. The state pages on this site note the overtime authority for each state. When state and federal rules conflict, the rule more favorable to the employee controls.
Exempt vs. non-exempt classification
Overtime applies only to non-exempt employees. The FLSA's "white collar" exemptions (executive, administrative, professional, computer, outside sales) require both a salary basis test (currently $684/week minimum, rising) and a duties test. Misclassifying a non-exempt employee as exempt is the most expensive single payroll mistake a small business can make: the back overtime, doubled liquidated damages, attorney's fees, and possible state penalties can total six figures for a single employee. Run a classification audit at least once a year, especially after promotions, role changes, or salary adjustments.
Recordkeeping
The FLSA requires employers to keep payroll records for at least three years and time records for at least two years. The records must show, at minimum, the workweek's start time, daily hours worked, total weekly hours, the regular hourly rate, total straight-time earnings, total overtime earnings, deductions, net wages, and pay date. Modern payroll software handles all of this; if you're running on a spreadsheet, build the columns yourself.