Overtime is built on the regular rate, not the base wage
The FLSA requires overtime at 1.5 times your regular rate of pay — and the regular rate is not always the number on your offer letter. It is your total straight-time compensation for the week, divided by the hours you worked. When your only pay is a flat hourly wage, the two are the same. When you also earn bonuses, commissions, or premiums, the regular rate is higher, and so is the overtime it produces.
What must be included
- Non-discretionary bonuses — production, attendance, safety, or output bonuses that are promised or expected. These belong in the regular rate.
- Commissions — included in the week (or period) they are earned.
- Shift differentials — the extra you earn for night or weekend shifts.
Because these raise the regular rate, they raise the overtime premium on every overtime hour that week. Omitting them is a frequent and quiet source of underpaid overtime.
What is excluded
- Truly discretionary bonuses — a surprise gift the employer decides on after the fact, with no promise or expectation, can be left out.
- Gifts and paid time off — holiday gifts and vacation/sick pay for hours not worked are generally excluded.
- Expense reimbursements — genuine reimbursements are not wages.
A state twist: how the bonus is divided
Even the arithmetic of folding a bonus into the regular rate can vary by state. California, for example, calculates the overtime impact of a flat-sum bonus using only the non-overtime hours as the divisor (the Alvarado rule), which produces a higher regular rate than the federal total-hours method. This is the kind of detail a generic calculator misses.
If your pay includes a bonus or commission, use your state's overtime tool and enter the additional pay in the "includable pay" field so it lands in the regular rate. Start from the states directory, and see the overtime basics guide for how the 40-hour rule fits in.