Overtime | Meaning and Definition

What is overtime?

Overtime implies those hours which exceed the normal working schedule in which an employee works. Although a general overtime definition refers to the hours worked beyond the typical work schedule, it is commonly implied to remunerations of such work done by the employee as well. The compensations rates and particulars of overtime vary between different companies.

How is overtime pay calculated?

To estimate the overtime rate on an hourly basis, multiply the typical pay rate of the company by its overtime rate. Now, to find gross overtime wages, multiply the number of overtime hours an employee worked by the rate of overtime you just calculated. 

Eligibility criteria for receiving overtime pay

The Fair Labor Standards Act states clearly that employees may earn overtime compensation, depending on their income level and classification.

  •   Exempt employees get salary and are not eligible for receiving overtime pay, irrespective of the hours they worked. Such employees typically hold positions like executive or administrative.
  •   Nonexempt workers must be given overtime for hours they work beyond 40 hours per workweek.
  •   Both nonexempt and exempt workers are eligible for receiving overtime compensation if their annual salary is less than $35, 568.

Overtime pay is reimbursed to employees who worked hours beyond the normal working time to finish an urgent task or due to other reasons. Before making any request for overtime, an employee must give a once over the overtime policy of the company. Typically, companies do not compensate the employees for 1 or 2 extra hours of work. Nonetheless, if an employee exceeds the 48-hour limit in a workweek, he/ she is entitled to claim overtime compensation.