Overtime is a multiplier, not a rate
There is no such thing as “the overtime rate”. There is your regular rate, and there is a multiplier applied to it. At $25 an hour, a 1.5× overtime hour is $37.50 — and if your regular rate was miscalculated, every overtime hour inherits the same error.
overtime hour value = regular rate × multiplier
The multiplier is the part everyone knows. The regular rate is the part that gets argued about, and it is the one that actually decides your money.
What different multipliers are worth
Five overtime hours on top of a 40-hour week, at a $25 regular rate. The only variable is the multiplier:
| Multiplier | Weekly pay | Annual (×52) | Gap vs no overtime |
|---|---|---|---|
| 1.0× (flat, no premium) | $1,125.00 | $58,500 | — |
| 1.25× | $1,156.25 | $60,125 | $1,625 |
| 1.5× (the common minimum) | $1,187.50 | $61,750 | $3,250 |
| 2.0× | $1,250.00 | $65,000 | $6,500 |
Moving from 1.25× to 1.5× on five hours a week is worth $1,625 a year. That is not a rounding difference — it is the difference between one multiplier and another, on the same hours, for the same employer.
The base rate is where it goes wrong
Overtime is computed on your regular rate, not your base wage. The regular rate is your total non-discretionary pay divided by hours worked, so anything routinely paid on top of the base wage — shift differentials, production bonuses, non-discretionary commissions — generally raises it. A night-shift worker on a differential therefore has a higher overtime rate than a day-shift worker on the same base.
Employers that compute overtime on the base wage alone are understating it. It is worth checking your payslip against both numbers once, because the gap compounds across every overtime hour you work.
Which hours count toward the threshold
Only hours actually worked. Unpaid meal breaks do not count, which produces the most expensive misunderstanding in this topic: a 45-hour week with five unpaid lunch hours is 40 worked hours, so there is no overtime. The person who assumed the clock on the wall counted works five extra hours for nothing.
The full list of what counts is in what counts as paid time; the lunch case specifically is in are lunch breaks paid.
Four traps, in order of how much they cost
- Computing on base wage instead of regular rate. Silently understates every overtime hour, and the error scales with how much variable pay you receive.
- Counting break time as worked time. The reverse error — it makes people believe they have overtime when the threshold has not been crossed, and it makes the hours look better than the payslip.
- Assuming a daily threshold exists. In many places overtime starts after 40 in a week, so a 12-hour Monday does not trigger it on its own. Some jurisdictions do use a daily rule — check which applies to you.
- Averaging two weeks together. Some arrangements allow hours to be averaged over a longer period, which can legally wipe out overtime that a single week would have earned. If your contract mentions averaging, that is what it is doing.
Working out whether an extra shift is worth it
The useful version of this calculation is prospective: someone asks you to cover a Saturday and you want the number before you answer. Eight hours at 1.5× on a $25 rate is $300 — which is a different conversation from “a Saturday”.
That is exactly what the overtime pay calculator does: set the multiplier, set the hours, see what the shift is worth before you agree to it. For the wider picture on which hours are premium in the first place, including night differentials, see what counts as paid time and night shift pay. Long shifts have their own arithmetic, covered in 12-hour shift pay.