Overtime Impact on Yearly Salary

Under the Fair Labor Standards Act (FLSA), non-exempt employees earn 1.5x their regular hourly rate for hours over 40 per workweek (29 USC §207(a)). Five hours of OT per week at $25/hr regular adds 5 x $37.50 x 52 = $9,750 to annual gross. Ten hours of OT per week at $25/hr regular adds $19,500. The OT premium is the 0.5x bonus above the regular rate (1.5x minus 1.0x).

Non-exempt employees are entitled to FLSA minimum wage and overtime protections. Exempt employees (typically executive, administrative, professional, or outside sales) are not. The 2026 salary threshold for exempt status is $58,656 per year (per DOL Final Rule April 2024, implementing $844/week then $1,128/week from January 2025). Workers earning below this threshold are non-exempt regardless of job duties, UNLESS the federal rule is currently blocked by court order in some states. Check DOL guidance for current status.

Only if they are non-exempt. The FLSA test has both a salary basis (must be paid on salary basis at or above the threshold) and a duties test (job duties must qualify as executive, administrative, professional, outside sales, or computer worker). A salaried worker below $58,656 is generally non-exempt and entitled to OT. A salaried worker above the threshold whose duties do NOT meet the executive/admin/professional test is also non-exempt.

Yes. California Labor Code 510 requires 1.5x for hours over 8 per day or 40 per week (daily or weekly OT, whichever produces more). Double-time (2x) applies over 12 hours per day or over 8 hours on the seventh consecutive workday in a workweek. California also has a higher exempt salary threshold ($66,560 per year as of 2024, indexed to minimum wage). Source: California Labor Code Section 510 and DIR Industrial Welfare Commission Wage Orders.

Overtime pay is taxed identically to regular wages: federal income tax (per IRS Publication 15-T withholding tables), Social Security 6.2%, Medicare 1.45%. There is no separate 'overtime tax bracket.' If your additional OT pushes you into a higher marginal federal bracket, only the portion above the bracket threshold is taxed at the higher rate. Some employers withhold OT at a flat 22% (supplemental rate) per IRS Pub 15-A; your year-end W-2 reconciles to total wages.