What the FLSA actually requires
Section 7 of the Fair Labor Standards Act, 29 U.S.C. §207, requires a covered non-exempt employee to be paid at least one and a half times the regular rate for every hour worked beyond 40 in a workweek. Three words in that sentence do most of the work in a real claim.
Workweek. Overtime is computed on a fixed and regularly recurring period of seven consecutive days. Hours cannot be averaged across two weeks: 30 hours one week and 50 the next produces 10 hours of overtime, not zero.
Non-exempt. Exemption is decided by duties and salary, not by job title or by being paid a salary. Misclassification — treating someone as exempt who is not — is the single largest source of these claims, and paying a salary does not by itself remove the overtime obligation.
Regular rate. This is the one people get wrong. The regular rate is all remuneration for employment in the workweek divided by all hours worked, and 29 CFR Part 778 spells out what must be included: nondiscretionary bonuses, production and attendance bonuses, shift differentials, commissions, and the value of certain other payments. A truly discretionary bonus, gifts, and payments for time not worked such as vacation are excluded. An employer that pays a $50 weekly production bonus and then computes overtime on the base hourly rate has underpaid every overtime hour, usually without realising it.
The formula, and why the answer is often half-time rather than time and a half
Start with the regular rate: R = (base rate × hours + other pay) ÷ hours. Note the denominator is all hours worked, including the overtime hours. Adding a $50 weekly bonus to a $22 hourly rate over 48 hours gives (22 × 48 + 50) ÷ 48 = 1,106 ÷ 48 = $23.041667.
The overtime rate is 1.5 × R, and the shortfall on each overtime hour is that figure less what was actually paid for the hour. Which produces two very different-looking answers depending on the facts:
Where the employee was paid straight time for the overtime hours — the usual case, since the hours appear on the timesheet and are paid at the base rate — the base pay for those hours has already been received. What is owed is the premium: 1.5R − base rate. On the bonus example, 34.5625 − 22 = $12.5625 an hour, on 8 overtime hours, is $100.50 a week. Notice that if the bonus were zero the shortfall would be 33 − 22 = $11.00 an hour; the $50 bonus is worth an extra $1.5625 an hour of overtime premium, which is half the amount the bonus adds to the regular rate.
Where the overtime hours were not paid at all — off-the-clock work, automatic meal-break deductions, unrecorded pre-shift and post-shift time — the whole 1.5R is owed for each hour, which is three times as much per hour as the half-time premium.
Then two multipliers apply to the total. Liquidated damages under 29 U.S.C. §216(b) are an additional amount equal to the unpaid wages, and they are the default: 29 U.S.C. §260 lets a court reduce or deny them only if the employer shows both good faith and reasonable grounds for believing it was compliant. The limitation period under 29 U.S.C. §255(a) is two years, extended to three where the violation was willful, meaning the employer knew or showed reckless disregard for whether its conduct was prohibited.
Worked example: 48 hours a week with a production bonus
A warehouse worker is paid $22 an hour, works 48 hours a week, and receives a $50 weekly production bonus. The employer pays 8 hours of overtime each week at $22 — straight time. The pattern ran for 104 weeks and the employer has no good-faith defence.
- Regular rate. (22 × 48 + 50) ÷ 48 = 1,106 ÷ 48 = $23.041667 an hour.
- Overtime rate required. 1.5 × 23.041667 = $34.5625 an hour.
- Shortfall per overtime hour. 34.5625 − 22.00 = $12.5625.
- Shortfall per week. 8 × 12.5625 = $100.50.
- Two-year window. 104 weeks × 100.50 = $10,452.00 of unpaid overtime.
- With liquidated damages. 10,452 × 2 = $20,904.00.
- If willful. The window extends to 156 weeks: 156 × 100.50 × 2 = $31,356.00.
Strip the bonus out and the same worker's regular rate is $22.00, the required overtime rate is $33.00, and the weekly shortfall is 8 × 11.00 = $88.00. The bonus therefore adds 100.50 − 88.00 = $12.50 a week to the claim, which is 8 × 0.5 × (23.041667 − 22) — half the bonus's effect on the regular rate, applied to each overtime hour. Over 104 weeks with doubling, that detail alone is worth $2,600.
How to read the result
The weekly shortfall is the number to check first, because everything else is that figure multiplied by weeks and by two. If it looks wrong, the regular rate is usually the reason: confirm that every payment attributable to the week is in the numerator and that all hours worked are in the denominator.
The gap between the two-year and three-year figures is what willfulness is worth. It is not a small distinction — on a claim running the full period, the third year adds half again to the total. Willfulness is a factual question the employee has to establish, and evidence that the employer had been told, audited, sued before, or ignored its own policy is what carries it.
Read the total as a floor for the wage claim itself, not as the value of the case. Several things sit outside it. State law frequently gives more: California requires daily overtime after 8 hours and double time after 12, several states have longer limitation periods, and some provide their own penalties on top. Attorney's fees and costs are mandatory for a prevailing plaintiff under §216(b), which changes the economics of a small claim entirely. And a collective action under §216(b) may involve every similarly situated employee, which is a very different exposure from one person's shortfall.
One timing point that matters more than any other: under the FLSA the limitation period runs backwards from the date a claim is filed, and in a collective action it keeps running for each individual until they file a written consent. Every week of delay drops a week off the back of the claim.
What one overtime hour is worth at each pay pattern
| What was paid for the hour | Required (1.5 × R) | Owed per hour | 10 hours a week for 104 weeks | Doubled |
|---|---|---|---|---|
| Nothing — off the clock | $30.00 | $30.00 | $31,200 | $62,400 |
| Straight time, $20.00 | $30.00 | $10.00 | $10,400 | $20,800 |
| $25.00 an hour | $30.00 | $5.00 | $5,200 | $10,400 |
| $28.00 an hour | $30.00 | $2.00 | $2,080 | $4,160 |
| $30.00 an hour | $30.00 | $0.00 | $0 | $0 |
Off-the-clock hours are worth three times as much per hour as hours paid at straight time, because the base pay for the hour has not been received either. That is why unrecorded time is the most valuable fact in a wage claim.
Where claims are found
- Misclassification as exempt. A salary and a manager title do not create an exemption; the duties test does. Assistant managers who spend most of their time on non-exempt work are the classic example.
- Bonuses left out of the regular rate. Nondiscretionary bonuses, shift differentials and commissions all belong in it under 29 CFR Part 778.
- Automatic meal-break deductions. Deducting 30 minutes for a break the employee worked through converts paid time into unpaid time, every shift.
- Pre-shift and post-shift work. Booting systems, donning required equipment, closing procedures and travel between job sites in the workday are often compensable.
- Averaging hours across weeks. Overtime is a workweek calculation and cannot be averaged over a two-week pay period.
- Independent contractor misclassification. A worker economically dependent on the business may be an employee under the FLSA whatever the contract says, and the overtime obligation follows.
The window runs backwards from filing
The FLSA's two-year limitation period, three for a willful violation, is measured back from the date the claim is filed — not from when you complained internally, and not from when you left the job. Each week that passes drops the oldest week off the claim. In a collective action the period keeps running for each individual until they file a written consent to join. If a claim looks worth pursuing, the calendar is not neutral.
State law, agencies and what else may be owed
The FLSA is a floor and state law routinely exceeds it. California requires overtime after 8 hours in a day and double time after 12, plus a seventh-consecutive-day rule; New York has its own frequency-of-pay and spread-of-hours requirements; a number of states have limitation periods of three to six years for wage claims. Where state and federal law both apply, the employee gets the more generous result, and it is common for the state claim to be worth several times the federal one.
You can pursue a claim in two ways. The Wage and Hour Division of the Department of Labor investigates complaints and can supervise payment of back wages at no cost to the employee. Or you can sue privately under §216(b), in which case a prevailing employee is entitled to attorney's fees and costs in addition to the back pay and liquidated damages. Note also that a private settlement of an FLSA claim without court or agency supervision is not always effective to release it, which is why a general release in a severance agreement may not dispose of a wage claim.
Related calculations sit close by. If the work was on a federally funded construction contract, the applicable rate is not the contract rate but the prevailing wage determination, and overtime is computed on the basic rate rather than on the total package — the prevailing wage and fringe benefit calculator handles it. If you were terminated after raising the pay issue, retaliation is separately actionable and the damages are computed as back pay and front pay, which the wrongful termination damages calculator covers. And where a judgment is eventually entered, post-judgment interest accrues on it — see the judgment interest calculator.