How is overtime calculated when I make $2.13 an hour?
The short answer
Example math
You work 45 hours in one workweek at the federal $2.13 cash wage, and your employer takes the $5.12 tip credit (illustrative).
| Line | Right way | Common mistake |
|---|---|---|
| Overtime rate | 1.5 × $7.25 = $10.875 | 1.5 × $2.13 = $3.195 |
| Tip credit for the hour | −$5.12 | none |
| Cash wage per overtime hour | $5.755 | $3.195 |
| 5 overtime hours | $28.78 | $15.98 |
- Your 40 regular hours pay 40 × $2.13 = $85.20 either way.
- Figured the wrong way, the check is short about $12.80 for the week.
- Your state may require a higher cash wage or daily overtime, which changes these numbers.
Not tax or legal advice.
Plain English
The federal rule
The Department of Labor says covered employees must get overtime for hours worked over 40 in a workweek, at no less than time and one-half their regular rate. A workweek is a fixed, repeating period of seven days, and your employer can’t average hours across two weeks. Federal law doesn’t require extra pay just for working a weekend or holiday.
Where the tip credit fits
DOL Fact Sheet #15 says an employer that takes a tip credit must make sure your cash wages plus tips reach at least the minimum wage and the overtime pay the law requires. It names a common mistake: figuring the overtime premium from the reduced cash wage. When the employer takes a tip credit, overtime is based on the full minimum wage, and the tip credit for an overtime hour can’t be bigger than for a regular hour.
Fact Sheet #15 also says that under certain circumstances an employer may be able to claim an additional overtime tip credit. It doesn’t spell those out, so if your stub shows something other than the math above, ask payroll how they figured it.
Service charges count toward overtime
A required service charge isn’t a tip. When your employer passes service-charge money to you, it’s part of your pay and must be included in your regular rate when overtime is figured.
Common mistakes
- Figuring overtime from the $2.13 cash wage.
- Averaging two weeks so a 50-hour week and a 30-hour week look like two 40-hour weeks.
- Leaving service-charge money out of the regular rate.
Official sources
Last verified:
Checked DOL Fact Sheet #23 (40 hours in a workweek, time and one-half, no averaging, no weekend or holiday premium as such) and Fact Sheet #15 (overtime figured on the full minimum wage when a tip credit is taken; service charges in the regular rate).
Still open: Fact Sheet #15 mentions an additional overtime tip credit “under certain circumstances” without saying which.