How do you calculate overtime pay in Oregon?

Calculating overtime pay in Oregon follows state and federal guidelines to ensure employees are fairly compensated for hours worked beyond the standard workday or workweek. While federal law sets a baseline for overtime, Oregon has specific regulations that employers must adhere to.

This guide discusses the key steps and considerations on how to calculate overtime pay in Oregon, covering the different calculation methods for hourly, salaried, commission-based, and piece rate employees.

Which Overtime Laws Apply in Oregon?

In Oregon, both state and federal overtime regulations apply to ensure that employees are fairly compensated for additional hours worked. Here’s a summary of the laws:

• Fair Labor Standards Act (FLSA): The federal FLSA sets the national standards for minimum wage, overtime pay, recordkeeping, and child labor practices for both full-time and part-time workers in the private, federal, state, and government sectors. The law requires employers to provide overtime pay at 1.5 times the regular rate of pay for hours worked over 40 in a workweek. While the FLSA provides the baseline for overtime pay, Oregon has additional protections that complement federal standards.
• Oregon Overtime Laws: Oregon state law governs overtime pay with provisions that not only align with the FLSA but also extend additional protections to employees. ORS 653.010 to ORS 653.261 outlines specific rules regarding overtime pay; Oregon requires employees to pay employees 1.5 times their regular rate of pay for hours worked over 40 in a week or more than 10 hours in a single day for certain industries.

How Much is Overtime Pay in Oregon?

Overtime pay in Oregon is calculated at one and a half (1.5) times the employee’s regular hourly rate for any hours worked over 40 in a workweek. Manufacturing, mills, and factory employees are eligible for daily overtime after working ten hours in a single day.

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

Who is Eligible for Overtime Pay in Oregon?

In Oregon, both federal and state laws set the rules for who qualifies for overtime pay. According to federal law (FLSA), non-exempt employees must be paid overtime if they work more than 40 hours a week. Oregon follows this rule but adds extra protections for certain workers:

• Employees in mills, factories, and similar industries receive overtime if they work more than 10 hours in a single day or more than 40 hours in a week.
• Some agricultural workers are eligible for overtime after working more than 55 hours in a week.
• Domestic workers, such as housekeepers, nannies, and home care workers, usually qualify for overtime after 40 hours in a week or 44 hours if they live with their employer.

Employers must classify employees correctly to ensure compliance.

Check out our guide on Overtime Rights in Oregon.

Hourly employees are paid based on the number of hours they work and receive a fixed hourly rate. In Oregon, these employees are entitled to overtime pay if they work more than 40 hours in a workweek or more than 10 hours in a day for specific industries (i.e., manufacturing and milling).

• Determine the regular rate of pay: An hourly employee’s regular rate of pay is simply their hourly wage. If the employee earns $20 per hour, then that’s her regular rate of pay.
• Identify overtime eligibility: Verify if the employee worked 40 hours in a workweek or over ten hours in a single day (for applicable industries like mills or manufacturing).
• Calculate overtime hours: Any hours worked beyond 40 in a workweek or ten in a single workday are counted as overtime hours. Subtract 40 (or ten) from the total hours worked to find the number of overtime hours. If the employee works 45 hours in a single workweek, their overtime hours is five (45 – 40).
• Calculate overtime rate: Multiply the regular rate of pay by 1.5 to determine the overtime rate. If the employee earns $20 per hour, their overtime rate would be $30 ($20 x 1.5).
• Compute overtime pay: Multiply the overtime hours by the overtime rate to determine the compensation for the additional hours worked. For example, if the employee earns $20 per hour and works 45 hours, they must be paid $150 ($30 x 5) for the five overtime hours.

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

For salaried employees in Oregon who are non-exempt and eligible for overtime, their overtime pay is based on their regular hourly rate. Here’s a step-by-step process on how to calculate overtime pay for salaried employees in Oregon:

• Determine the regular hourly rate: Divide the employee’s total weekly salary by the number of hours they are expected to work in a week. For example, if the employee is paid $640 per week and expected to work 40 hours, their regular hourly rate would be $16 ($640 ÷ 40).
• Calculate overtime rate: Multiply the regular hourly rate by 1.5 to determine the overtime rate. Using the previous example, the overtime rate would be $24 ($16 x 1.5).
• Identify overtime hours: Count the hours worked over 40 in a workweek (or over ten hours in a day for certain industries). For example, if the employee worked 45 hours in a week, the overtime hours would be five (45 – 40).
• Compute overtime pay: Multiply the number of overtime hours by the overtime rate. In this case, the employee is entitled to $120 (5 x $24).

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

For commission-based compensation, overtime is calculated by determining the regular rate of pay based on their total earnings. Here’s how it is done:

• Determine the regular hourly rate: Divide the employee’s total earnings (salary plus commissions) for the workweek by the total number of hours worked. For example, if the employee earned $820 in a week (including commissions) and worked 50 hours, the regular hourly rate would be $16.40 ($820 ÷ 50).
• Calculate overtime rate: Multiply the regular rate by 1.5. In this example, the overtime rate would be $24.60 ($16.40 x 1.5).
• Apply to overtime hours: The employee is entitled to overtime pay for any hours worked over 40 in a workweek. If they worked 50 hours, ten hours of overtime would compensated for $246 ($24.60 x 10).

For employees paid by piecework (such as workers in manufacturing or agriculture), overtime is calculated by determining the regular rate of pay based on total earnings. Here’s how to calculate overtime pay for piece-rate employees in Oregon:

• Determine the regular rate: Calculate the total piece rate earnings for the week, and divide by the total number of hours worked. For example, if an employee earned $800 by producing pieces in a 50-hour week, the regular rate would be $16 per hour ($800 ÷ 50).
• Calculate overtime rate: Multiply the employee’s regular rate by 1.5 to get the overtime rate. In this case, the overtime rate would be $24 per hour ($16 x 1.5).
• Apply to overtime hours: The employee must be paid the overtime rate for all hours worked over 40 in a week. If they worked 50 hours, ten hours of overtime would be paid at $24, which makes the employee entitled to $240 ($24 x 10) for overtime compensation.

Under ORS 12.110 (3), the statute of limitations for claiming unpaid overtime is two years.

Employees are encouraged to claim within this timeframe to recover any unpaid overtime compensation, interest, and other penalties. Employees must act quickly to ensure their claim falls within the legal period.

Oregon employers must comply with the General Recordkeeping Requirements (OAR 839-020-0080) for overtime wage compliance. This rule requires employers to maintain an accurate record of each employee’s hours worked and wages paid, including any overtime. Employers must document the hours worked each day and week, including the start and stop times for work, overtime wages earned, and any applicable deductions.

Although Oregon recordkeeping requirements do not specify the retention periods, the federal law under the FLSA requires employers to retain payroll records for at least three years. These records include personal details of employees, daily and weekly hours worked, overtime earnings, and total wages paid. Accurate recordkeeping ensures compliance with state and federal laws, reducing the risk of penalties for wage violations.