What is an Overtime?
Overtime refers to the extra hours worked by an employee beyond their standard working hours. This usually occurs when employees are required to work beyond their typical workday or workweek. Overtime hours are often compensated at a higher rate than regular hours to encourage employees to work longer hours.
The exact rules and rates for overtime depend on the company’s policies and the labor laws that apply in a specific region or country. In many jurisdictions, labor laws mandate that employees who work beyond a certain threshold (e.g., more than 8 hours in a day or 40 hours in a week) are entitled to overtime pay, which is typically calculated at a higher rate than their standard hourly wage.
For example, common overtime rules include:
- Employees may earn time and a half (1.5 times their regular pay rate) or double time (2 times their regular pay rate) for overtime hours worked, depending on local labor laws or the employer’s policy.
- The Fair Labor Standards Act (FLSA) in the United States, for example, mandates that non-exempt employees be paid overtime at 1.5 times their regular hourly wage for hours worked beyond 40 hours in a week.
Overtime rules and rates can vary significantly across countries and industries.
How HR teams use this term
HR teams usually use Overtime when they write policies, explain employee communication, review payroll or leave records, or keep employee data clean in an HRMS.