Divide the includable pay for your workweek by the total hours you worked to find your regular rate. Overtime hours have to be compensated at 1-1/2 times that rate, and where straight-time pay for those hours is already included in the week’s earnings, the additional premium still owed is one-half the regular rate. The threshold is 40 hours under federal law and 48 hours under Minnesota law.
The step people skip is the first one. The regular rate is a weekly calculation rather than the hourly figure on your offer letter, and in any week where you earned something beyond straight hourly pay the two numbers are different.
You can reach out to us by calling (844) FERRARO.
The Regular Rate Is a Calculation
Minn. R. 5200.0130 states the method in one sentence: in calculating overtime compensation due, the regular rate of pay is determined by dividing the employee’s remuneration in any workweek by the total hours worked.
The Department of Labor and Industry states the same rule and adds an important qualifier about the denominator. Overtime is based on actual hours worked in a seven-day workweek, so holiday hours, vacation time and sick leave are not counted toward the overtime threshold.
That produces two separate questions for any week. What is the total pay that belongs in the numerator, and how many hours were actually worked.
Step by Step, With Numbers
Take an employee paid $20 an hour who works 46 hours in a week, earns a $60 nondiscretionary production bonus and receives a $1 per hour shift differential for 10 of those hours. Assume the 40-hour threshold applies.
| Step | Calculation | Result |
| Straight-time pay | 46 hours at $20.00 | $920.00 |
| Shift differential | 10 hours at $1.00 | $10.00 |
| Nondiscretionary bonus | Earned in this week | $60.00 |
| Total remuneration | $920.00 + $10.00 + $60.00 | $990.00 |
| Regular rate | $990.00 ÷ 46 hours | $21.52 |
| Overtime hours | 46 less 40 | 6 |
| Premium already paid at straight time | Included in the $990.00 | Half-time premium remains due |
| Additional half-time premium | 6 hours at $10.7609 | $64.57 |
| Total owed for the week | $990.00 + $64.57 | $1,054.57 |
The employee’s hourly wage was $20.00 and the overtime was computed on a regular rate of $21.5217, which is why the premium is figured from the unrounded rate rather than from $21.52. An employer that pays $30.00 an hour for those six hours, using 1-1/2 times the base wage, has underpaid the week even though it appears to have paid overtime.
What Goes Into Total Pay
Remuneration for the week is broader than base wages. It ordinarily includes hourly pay, salary allocated to the week, piece rate earnings, commissions, shift differentials, hazard pay, on-call pay for compensable time, and nondiscretionary bonuses.
The common thread among nondiscretionary bonuses is that the employee was promised or led to expect them. Attendance bonuses, production and quality bonuses, safety bonuses, retention bonuses and bonuses announced in advance to encourage employees to work faster or stay longer are all payments the employee could count on by meeting stated conditions.
Minn. R. 5200.0160 adds that credit granted the employer for items such as meals must be included in the remuneration total.
What Comes Out of Total Pay
Minnesota’s rules list the payments that are not part of remuneration for this calculation.
| Excluded from the regular rate | Note |
| Reimbursement for expenses incurred on the employer’s behalf | Genuine expense reimbursement rather than disguised wages |
| Premium payments for overtime, or for Saturdays, Sundays, holidays or scheduled days off | Only where the premium rate is at least 1-1/2 times the normal rate |
| Bonuses given at the employer’s discretion as to both the time and the amount of payment | Discretion must extend to both elements |
| Cash or other valuables in the nature of gifts on special occasions | Not tied to hours, production or efficiency |
| Payments for occasional periods when no work is performed, including vacation, holiday or illness | Also not counted as hours worked |
| Payments under a bona fide profit-sharing, thrift or savings plan | Only if amounts are determined without regard to production or efficiency |
| Irrevocable employer contributions to a bona fide old-age, retirement, life, accident or health plan | Third-party trustee arrangement |
Source: Minn. R. 5200.0140. Verified September 6, 2026.
Federal law reaches the same result through 29 U.S.C. § 207(e) and 29 CFR part 778, which treats a bonus as discretionary only where both the fact of payment and the amount are determined at the employer’s sole discretion at or near the end of the period, and not under any prior contract, agreement or promise causing the employee to expect the payment.
Two or More Rates in the Same Week
An employee who works at different rates in the same workweek does not get to pick one for the overtime calculation.
The rule follows from the definition. Total pay for the week divided by total hours worked produces a weighted average, and that average is the regular rate. An employee who works 30 hours at $18 and 16 hours at $22 has earned $892 for 46 hours, which is a regular rate of $19.39 rather than either posted rate.
Federal law reaches the same result at 29 CFR 778.115. It also provides a limited alternative under section 7(g)(2) of the Act and 29 CFR 778.417 to 778.419, under which overtime may be computed at the rate applicable to the work performed during the overtime hours. Advance agreement is necessary and is not sufficient on its own; the regulation also requires bona fide rates, qualifying overtime hours and payment for enough overtime hours to cover the excess.
Salaried, Piece Rate and Commission Employees
The formula does not change for these pay structures. What changes is how the numerator is assembled.
For a salaried nonexempt employee, the salary allocated to the week goes into remuneration. Under Minnesota’s rule the divisor is the total hours actually worked. Federal calculations for salaried nonexempt employees can differ depending on what the salary was intended to cover and on whether a method such as 29 CFR 778.114 applies. For a piece rate employee, the week’s piece earnings go into remuneration and the divisor is the hours actually worked, including any hours spent on nonproductive tasks. For a commissioned employee, commissions earned in the week are part of remuneration, and where a commission is earned over a longer period it has to be allocated back across the weeks that produced it.
Minn. R. 5200.0170, subp. 2 contains a narrow exception for retail and service establishments. An employer does not violate the 48-hour requirement for an employee of such an establishment whose regular rate exceeds 1-1/2 times the applicable minimum wage and where more than half of the employee’s compensation for a representative period of at least one month represents commissions on goods or services. Both conditions have to hold.
When Overtime Has to Be Paid
Minn. R. 5200.0150 provides that overtime pay must be paid no later than the payday immediately following the regular payday for the pay period in which it was earned.
That gives an employer limited room to reconcile a calculation, and no room to hold overtime indefinitely. Where a bonus is not calculable until after the period ends, the employer is expected to pay the overtime once the amount can be determined rather than to leave it out.
Pay frequency generally is governed by Minn. Stat. § 181.101, which requires wages to be paid at least once every 31 days on a regular payday designated in advance.
Checking Your Own Numbers
Your earnings statement carries most of what you need. Under Minn. Stat. § 181.032 it must show your rate or rates of pay and the basis on which you are paid, your gross pay, each deduction and your net pay, together with your total hours worked in the pay period unless you are exempt from chapter 177.
Three useful checks are these. Compare the hours on the statement against your own record of hours worked, including preparation, cleanup, meetings and interrupted breaks. Add up everything you earned for the week and divide by the hours you worked, then compare that figure to the rate your employer used for overtime. And check whether any bonus or differential you received ever changed the overtime line.
Our pages on unpaid wages in Minneapolis and St. Paul wage and hour claims explain what a claim involves once those numbers are together.
Frequently Asked Questions
Is my overtime rate just 1.5 times my hourly wage?
Only in a week where your hourly wage was the whole of your pay for hours worked. Where you also received a shift differential, a nondiscretionary bonus, commissions or a second rate, the regular rate is higher than your base wage and the overtime has to be computed on the higher figure.
Does paid time off count toward the overtime threshold?
No. The Department of Labor and Industry states that holiday hours, vacation time and sick leave are not counted, because overtime is based on hours actually worked. An employee who takes eight hours of vacation and works 36 hours has worked 36 hours for this purpose.
My employer pays double time on Sundays. Does that count as overtime?
A premium of at least 1-1/2 times the normal rate paid for work on a Sunday, holiday or scheduled day off is excluded from the regular rate under Minn. R. 5200.0140, and it may be credited toward overtime compensation due. That is different from saying it satisfies the overtime obligation for the week, which depends on the hours worked and the amounts involved.
What if my employer rounds my time?
Under the federal regulation at 29 CFR 785.48(b), rounding is not prohibited as such, and the question is whether the practice results over time in employees being undercompensated. A system that consistently rounds against the employee produces unpaid hours, and those hours count toward the overtime threshold as well as toward straight-time pay.
When does my employer have to pay overtime it missed?
Minn. R. 5200.0150 requires overtime to be paid no later than the payday immediately following the regular payday for the pay period in which it was earned. Overtime that surfaces later is still owed, and the limitations period in Minn. Stat. § 541.07, clause (5) runs from the violation rather than from the day it was discovered.
This article provides general information about Minnesota and federal overtime calculation and is not legal advice. The correct calculation depends on your pay structure and the hours you actually worked. Confirm current requirements with the Minnesota Department of Labor and Industry, the U.S. Department of Labor or an attorney.
