CashoutGlossary / Overtime
Overtime
Pay of at least 1.5 times your regular rate for hours over 40 in a workweek, which federal law requires for non-exempt workers, tipped ones included.
Under the FLSA, overtime must be paid at least at one and a half times your regular rate of pay for hours over 40 in a workweek. A workweek is 168 hours in 7 consecutive 24-hour periods, and each one stands alone: your employer can't average a 50-hour week with a 30-hour week to skip overtime. Some employees, such as many salaried managers, are exempt.
For tipped workers, the math is where mistakes happen. If your employer takes a tip credit, overtime is figured on the full minimum wage, $7.25 federally, not your cash wage, and the tip credit can't be larger in an overtime hour than in a regular hour. So at the federal minimum your cash pay for each overtime hour is $2.13 plus half of $7.25, about $5.76. It isn't 1.5 × $2.13 = $3.20. If your state's minimum wage is higher, the numbers go up.
Federal law looks only at the week. Some states add more: California requires time and a half for hours over 8 in a workday and double time over 12. Federal law also doesn't cap the hours an employee 16 or older can be scheduled.
Overtime is still wages for Social Security and Medicare, but for 2025 through 2028 the federally required half-time premium can be deducted from federal income tax as qualified overtime. Check what you're owed with the tipped overtime calculator.
Related terms
Fair Labor Standards Act (FLSA) · Qualified overtime · Tip credit · Direct wage · Wage theft
