How do you calculate overtime pay in North Carolina?

When it comes to calculating overtime pay in North Carolina, understanding the rules and regulations is essential to ensure employees are compensated fairly for their work.

This guide will walk you through the key steps and considerations for calculating overtime pay in North Carolina across different types of workers, including hourly, salaried, commission-based, and piece rate employees.

Which Overtime Laws Apply in North Carolina?

Both state and federal overtime laws apply in North Carolina, with the federal Fair Labor Standards Act (FLSA) setting the primary standards. Under the FLSA, non-exempt employees are entitled to overtime pay at a rate of 1.5 times their regular rate of pay for any hours worked over 40 in a workweek. Certain employees, such as executives, professionals, and administrative workers, may be exempt from overtime based on their salary and job duties.

The North Carolina Wage and Hour Act (NCWHA) does not impose any additional overtime rules beyond those established by federal law, meaning the state defers to FLSA guidelines. Both federal and state laws require overtime pay only after 40 hours in a workweek, with no requirement for overtime based on daily hours worked.

How Much is Overtime Pay in North Carolina?

In North Carolina, overtime pay is calculated at one and a half times an eligible employee’s regular hourly rate for any hours worked over 40 in a workweek. This means that if employees earn $15 per hour, their overtime rate would be $22.50 for each hour worked beyond 40 in a week.

To learn more, check out our guide on North Carolina Overtime Laws. 

Who is Eligible for Overtime Pay in North Carolina?

The federal FLSA determines eligibility for overtime pay in North Carolina. Under the FLSA, non-exempt employees, including hourly workers and certain salaried employees who earn below a specified threshold or whose job duties do not meet the exempt criteria, are eligible for overtime pay.

Check out our guide on Overtime Rights in North Carolina.

Hourly employees in North Carolina are paid based on the number of hours worked. Overtime pay is required for non-exempt employees who work more than 40 hours in a workweek. To calculate overtime for hourly employees:

• Determine the regular hourly rate: This is the employee’s base pay rate for non-overtime hours. For example, if an employee earns $15 per hour, this is their regular rate of pay.
• Calculate the overtime rate: Multiply the regular hourly rate by 1.5. If the regular rate is $15, the overtime rate would be $22.50 ($15 x 1.5). So, the employee earns $22.50 per hour for overtime hours.
• Identify the overtime hours: Determine how many hours the employee worked over 40 in a workweek. For example, if an employee works 50 hours a week, the overtime hours are ten (50 – 40).
• Calculate overtime pay: Multiply the overtime rate by the number of overtime hours. If the employee earns $22.50 per overtime hour and works 50 hours a week, the employee would earn $225 in overtime pay for that week.

Read our guide on Your Rights as an Hourly Employee in North Carolina to learn more.

Salaried employees in North Carolina earn a fixed weekly or monthly salary. While some salaried employees are exempt from overtime, non-exempt salaried employees are still entitled to overtime pay if they work more than 40 hours in a workweek. The overtime calculation for salaried employees depends on whether they are paid weekly or monthly salary.

To calculate overtime for salaried employees who receive weekly pay:

• Determine the regular hourly rate: Divide the employee’s weekly salary by the number of hours the salary is intended to cover. If an employee’s weekly wage is $800 and they work 40 hours a week, their regular hourly rate would be $20 ($800 / $40).
• Calculate the overtime rate: Multiply the regular hourly rate by 1.5 to get the overtime rate. So, if the employee’s regular rate is $20, the overtime rate is $30 per hour ($20 x 1.5).
• Identify the overtime hours: Calculate the number of hours the employee worked over 40. If the employee worked 50 hours, the overtime hours would be ten (50 – 40).
• Calculate overtime pay: Multiply the overtime rate by the number of overtime hours. So, if the employee earns $30 per overtime hour, the employee would receive $300 for the ten overtime hours ($30 x 10).

To calculate overtime for salaried employees who receive monthly pay:

• Determine the regular hourly rate: Convert the monthly salary to a weekly amount by multiplying by 12 months, dividing by 52 weeks, then dividing by 40 hours. If an employee earns $3,000 monthly, the weekly salary would be $692.31 ($3000 x 12 = $36,000, then $36,000 / 52). If the employee’s weekly wage is $692.31, their hourly rate is $17.31 ($692.31 / 40).
• Calculate the overtime rate: Multiply the regular hourly rate by 1.5 to get the overtime rate. So, if the employee’s regular rate is $17.31, the overtime rate would be $25.97 per overtime hour.
• Identify the overtime hours: Calculate the number of hours worked over 40 in the workweek. For example, if the employee worked 45 hours, the overtime would be five (45 – 40).
• Calculate overtime pay: Multiply the overtime rate by the number of overtime hours. Using the example above, the employee would earn $129.85 ($25.97 x 5) in overtime for that week.

Check out our guide on Your Rights as a Salaried Employee in North Carolina.

Commission employees are typically paid a base salary plus commissions or solely on commissions, but they are still entitled to overtime if they work more than 40 hours in a workweek.

To calculate overtime for commission employees:

• Determine total weekly earnings: Add the employee’s base pay and commissions earned during the workweek. For example, if the employee earned a base salary of $300 and $700 in commissions, the total weekly earnings would be $1,000 ($300 + $700).
• Calculate the regular hourly rate: Divide the total weekly earnings by the total number of hours worked that week. For example, if the employee earned $1,000 and worked 50 hours, their hourly rate would be $20 ($1,000 / 50).
• Calculate the overtime rate: Multiply the regular hourly rate by 1.5. If the employee earns $20 per hour, the overtime rate would be $30 per overtime hour.
• Identify overtime hours: Overtime hours are those worked beyond 40. If the employee worked 50 hours, the overtime hours would be ten (50 – 40).
• Calculate overtime pay: Multiply the overtime rate by the number of overtime hours. Using the example above, the employee would earn $300 ($30 x 10) in overtime pay for that week.

Piece-rate employees are paid based on the number of units or pieces they produce rather than by the hour. Despite this payment structure, they are entitled to overtime pay for hours worked over 40 in a workweek.

• Determine the piece rate and total earnings: The piece rate is the amount paid for each unit or piece produced. If an employee is paid $10 per unit and produces 50 units in a workweek, the employee’s total earnings are $500 ($10 x 50).
• Calculate the regular hourly rate: To determine the regular hourly rate, you must divide the total earnings by the total number of hours worked. If the employee worked 50 hours, the employee’s hourly rate is $10 ($500 / 50).
• Calculate the overtime rate: The overtime rate is 1.5 times the regular hourly rate. If an employee’s hourly rate is $10, the overtime rate would be $15 ($10 x 1.5).
• Identify the overtime hours: Determine the number of hours worked over 40 in the workweek. If the employee worked 50 hours, the overtime is ten (50 – 40).
• Calculate overtime pay: Multiply the overtime rate by the number of overtime hours. If the employee works ten overtime hours, the employee receives $150 in overtime pay ($15 x 10).

The federal FLSA governs the statute of limitations for claiming unpaid overtime in North Carolina. Employees can file claims for unpaid overtime within two years of the violation. If the employer knowingly or recklessly violated overtime laws, the statute of limitations extends to three years.

In North Carolina, the recordkeeping requirements for overtime wage compliance follow the FLSA guidelines, which require employers to maintain accurate records for each employee. The requirements include:

• Employee information
• Work hours
• Total wages earned during each pay period
• Pay dates and periods
• Deductions and additions

Employers must retain these records for at least three years. Records on wage computations, such as time cards and work schedules, must be kept for two years. Employers can use any method that accurately records hours worked, such as manual timecards, punch clocks, or automated time and attendance software, as long as the information is precise. Employers must ensure that records are accurate and accessible in case of an audit or wage dispute.