In this step-by-step article you’ll learn how to calculate overtime pay, regardless of your employment classification.
In Texas, the Fair Labor Standards Act (FLSA) sets out the rules regarding overtime pay for employees. This federal law requires employers to compensate employees at a rate of one and half times their regular rate for hours worked over 40 during a workweek.
While this may seem straightforward, the calculations become a bit more complex when it comes to salaried versus hourly employees.
Important Terms Related to Overtime Pay Calculations
Before walking through the overtime calculator in Texas, it is important to understand a few key terms.
An employee’s regular rate is the amount he or she earns per hour of work.
Straight time is the number of hours an employee worked, up to 40 hours, for which they are paid their regular rate.
Overtime hours are hours worked over 40 during a workweek, which is seven consecutive days.
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How to Calculate Overtime for…
To calculate an hourly employee’s overtime pay, use the following formula:
- (Regular Rate x Straight Time) + ((Regular Rate x 1.5) x Overtime Hours)
Consider an example to better understand how the calculation works. Suppose an hourly employee earns $10 per hour and works a 60-hour workweek. The employee has a regular rate of $10/hour, straight time of 40 hours, and overtime of 20 hours. The calculations would be as follows:
- ($10/hour x 40 hours) + (($10/hour x 1.5) x 20 hours);
- $400 + ($15/hour + 20 hours);
- $400 + $300; for a total of
Based on the information above, the employer must pay the employee $700, $300 of which is overtime pay.
The FLSA requires employers to pay salaried employees overtime as well. Calculating overtime for employees who receive a salary takes a bit more work because the calculations differ based on the employee’s fixed workweek.
However, the first step is the same for all salaried employees一determine the regular rate. To do this, take the employee’s weekly salary and divide it by the number of hours the salary is meant to compensate. For example, an employee who earns $400 for a 40-hour workweek has a regular rate of $10/hour ($400/40 hours).
The overtime calculator in Texas for salaried employees changes at this point based on the employee’s set workweek.
40 Hour Workweek
In the scenario where a salaried employee has a fixed workweek of 40 hours, the calculation is as follows:
- (Weekly Salary) + ((Regular Rate x 1.5) x Overtime Hours) = Gross Earnings
Let’s use an example where a salaried employee earns a $400 salary for a 40-hour workweek and works 60 hours.
First, calculate the regular rate. Take the $400 salary and divide it by the 40-hour workweek. This puts the regular rate at $10 per hour. Apply this information to the calculation above, and the employee will take home $700.
- (Weekly Salary) + ((Regular Rate x 1.5) x Overtime Hours);
- $400 + (($10/hour x 1.5) x 20 hours);
- $400 ($15/hour x 20 hours);
- $400 + $300; which equals a total of
Of the $700, $300 is overtime pay.
More Than 40 Hour Workweek
As long as the employer appropriately compensates the employee, mandatory overtime is permissible in Texas.
For salaried employees with a fixed workweek of more than 40 hours, the calculation changes because the employee’s salary is meant to compensate for a longer workweek. This means that a portion of the overtime hours is already covered by the employee’s salary.
Consider an employee who earns a $500 salary for a 50-hour workweek and works 50 hours. The complicated part here is that the employee’s salary already compensated him for the overtime.
However, the employee was paid $10/hour for the 10 overtime hours when he should have received $15/hour, which is time and a half. To calibrate all of this, the overtime hours need to be multiplied by one-half of the regular rate.
As always, first calculate the regular rate, which is $10/hour ($500/50 hours). Using the following formula, input the information:
- (Weekly Salary) + ((Regular Rate x .5) x Overtime Hours Between 40 and 50);
- $500 + (($10/hour x .5) x 10 hours);
- $500 + ($5/hour x 10 hours);
- $500 + $50; which equals
In the instance where an employee works more than the fixed workweek, say 55 hours in this example, the calculation changes. The employee must be paid 1.5 times the regular rate for the hours worked over 50. Consider the following formula:
- (Weekly Salary) + ((Regular Rate x .5) x Overtime Hours Between 40 and 50) + ((Regular Rate x 1.5) x Overtime Hours Past 50 Hours);
- $500 + (($10/hour x .5) x 10 hours) + (($10/hour x 1.5) x 5 hours);
- $500 + ($5/hours x 10 hours) + ($15/hour x 5 hours);
- $500 + $50 + $75; which equals
The formula takes into account the underpayment and lack of payment for all overtime hours.
Less Than 40-Hour Workweek
For salaried employees whose fixed workweek is less than 40 hours, the employee needs to be compensated for the straight time he or she worked. In other words, determine how much to pay the employee for the number of hours worked over the fixed workweek but under 40 hours.
Calculate the regular rate and then use the following formula:
- (Weekly Salary) + (Regular Rate x Unpaid Straight Time) + ((Regular Rate x 1.5) x Overtime Hours).
Consider an example where a salaried employee makes $300 for a 30-hour workweek and works 50 hours. Take the $300 salary and divide it by 30 hours to get a regular rate of $10 per hour.
The employee worked 30 hours of paid straight time (regular rate for 30-hour fixed workweek), 10 hours of unpaid straight time (difference between 30 hours and 40 hours), and 10 hours of overtime (50 hours minus 40 hours).
By inputting these numbers into the calculation, the employee will earn $550:
- (Weekly Salary) + (Regular Rate x Unpaid Straight Time) + ((Regular Rate x 1.5) x Overtime Hours);
- $300 + ($10/hour x 10 hours) + (($10/hour x 1.5) x 10 hours);
- $300 + $100 + ($15/hour x 10 hours)’
- $300 + $100 + $150; for a total of
The $500 take-home pay is made up of a $300 weekly salary, $100 unpaid straight time, and $150 of overtime pay.
Some salaried employees have a fluctuating workweek with no set hours. In these cases, calculate the regular rate using the number of hours worked, keeping in mind that the rate will increase or decrease depending on how many hours the employee worked.
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