By Deeyoung Ma - April 14, 2026 - 7 min read
How to Calculate Overtime Pay
Learn overtime pay formulas, Canadian and US thresholds, daily vs weekly overtime, and the scheduling mistakes that raise payroll costs.
Here's how overtime usually happens: a cook covers a sick coworker, a server stays late to help with a busy close, and nobody bothers to check whether the weekly total just jumped past the threshold. It doesn't feel like a $300 mistake in the moment. It feels like being a good team player. Payroll just has a different opinion.
This is the practical math — what to look for, where the thresholds sit, and how to catch it before the schedule goes live.
The basic formula never changes
Overtime pay = regular rate × overtime multiplier, applied to hours above the threshold. In most of Canada and the US, that multiplier is 1.5.
Say you've got a line cook at $18/hour who ends the week at 46 hours. If your province's threshold is 44 hours, only 2 of those hours are overtime. The math: $18 × 1.5 = $27 overtime rate. $27 × 2 = $54 overtime pay. Gross pay for the week: (44 × $18) + $54 = $846. Simple enough — until you're managing three provinces with three different thresholds.
Canadian thresholds vary more than most operators expect
There's no single federal number that covers restaurants. Each province writes its own rules.
Ontario kicks in at 44 hours weekly. No daily threshold — you can work someone 12 hours a day at straight time as long as the weekly total stays under 44. British Columbia starts overtime after 8 hours in a single day or 40 in a week, whichever hits first. Alberta has both: 8 hours daily and 44 hours weekly. Quebec is a straight 40-hour weekly threshold. Nova Scotia? 48 hours — the highest in the country.
What this means in practice: the exact same schedule that's perfectly legal in Halifax will trigger overtime in Vancouver. If you're running a multi-province operation — or even just hiring someone whose previous experience was in a different province — don't assume the rules travel.
The US side is simpler at the federal level but gets complicated fast at the state level
Under the FLSA, overtime starts after 40 hours in a workweek. No daily threshold — a 14-hour day is fine for overtime purposes as long as the weekly total stays under 40. On paper, that's simpler than Canada's patchwork.
But then states start layering on their own rules. California is the notorious one: overtime after 8 in a day, double time after 12 in a day, and a seventh-consecutive-day rule that catches a lot of restaurant operators off guard. Alaska and Nevada have daily thresholds too. When state and federal rules conflict, employees get whichever benefit is larger. That's not a suggestion — that's the law.
Daily versus weekly overtime — how they interact matters
In provinces and states with both thresholds, hours don't get counted twice. Say an employee in BC works a 10-hour shift on Monday. Those last 2 hours earn daily overtime — but those same 10 hours still count toward the weekly total. If by Thursday they've hit 40 hours, Friday's hours trigger weekly overtime starting from hour one. The practical rule: use whichever calculation produces more overtime for the employee.
The mistakes I see most often
- Wrong workweek definition. Overtime runs on a fixed 7-day window, not a rolling one. If your workweek is Monday to Sunday, you can't average hours across Sunday-to-Saturday.
- Assuming salary means no overtime. In Canada, salaried managers qualify for overtime unless they meet a specific management exemption — usually tied to how much time they actually spend managing versus working the floor. In the US, salaried employees below $684/week (as of 2024) are still overtime-eligible.
- The tip-wage trap. In some jurisdictions, overtime applies to the full minimum wage, not the tipped minimum. If you're only calculating OT on the server's base rate, you're probably underpaying.
- Non-discretionary bonuses. If you promised a bonus in advance and the employee earned it, that bonus generally gets folded into the regular rate before the overtime multiplier applies.
The real fix isn't better math — it's better timing
Most overtime doesn't come from one heroic shift. It creeps in because nobody ran the weekly total after a swap or a schedule adjustment mid-week. Check projected hours twice: once when you build the schedule, and again after any change. A spreadsheet with a running total column works. A scheduling tool that flags thresholds automatically works better — it complains before payroll does, which is exactly when you want to hear about it.
For source checks, compare your policy against Ontario's overtime pay guide and BC's overtime pay rules. If the week includes a public holiday, read the stat holiday pay for restaurant staff guide before payroll. To test a weekly schedule before payroll, use the overtime calculator and employee hours calculator.
FAQ
What is the basic overtime pay formula?
Overtime pay is usually regular hourly rate multiplied by the overtime multiplier, then multiplied by overtime hours. In many Canadian provinces the common multiplier is 1.5 times the regular rate.
Does overtime affect CPP, EI, and income tax?
Overtime increases gross employment income, so it can affect payroll deductions for CPP, EI, and income tax withholding. The exact deduction is handled through payroll calculations, not the schedule itself.
Do salaried restaurant employees get overtime?
A salary does not automatically remove overtime eligibility. Management exemptions and role-specific rules vary by province, so restaurant operators should verify the actual duties and local employment standards.
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Build the schedule before the week gets loud
Maxuod Shift keeps employee availability, overtime risk, payroll estimates, and tip distribution in the same place for small restaurant teams.