Overtime Rules Guide

What Are Overtime Rules?

Overtime rules are federal and state labor laws that require employers to pay eligible employees additional compensation for hours worked beyond standard work periods. These rules protect workers from excessive hours without fair compensation.

The primary federal law governing overtime is the Fair Labor Standards Act (FLSA), which establishes minimum wage, overtime pay, recordkeeping, and child labor standards. States can have additional or more protective overtime requirements.

Federal Overtime Rules (FLSA)

Key Federal Requirements

• Overtime Threshold: 40 hours per workweek
• Overtime Rate: 1.5x regular rate of pay
• Workweek Definition: Any fixed 7 consecutive days (168 hours)
• Exemptions: Certain executive, administrative, professional, and outside sales employees

Who Is Covered?

Most employees are covered by FLSA overtime rules unless they meet specific exemption criteria. Coverage depends on:

Enterprise coverage (businesses with $500,000+ annual sales)
Individual coverage (employees engaged in interstate commerce)
Specific industry coverage (hospitals, schools, government agencies)

State-Specific Overtime Rules

Many states have additional overtime requirements beyond federal law. Click on your state below to see specific rules and regulations:

CA NY TX FL IL PA OH GA NC MI NJ VA WA AZ TN IN MO MD WI CO MN LA AL KY SC OK AR MS UT CT MA ME NH VT RI DE DC HI AK ID MT ND SD NE KS IA WV NV OR WY

Exempt vs Non-Exempt Employees

Non-Exempt Employees

• Must receive overtime pay for hours over 40/week
• Can be paid hourly, salary, or commission
• Must track all hours worked
• Protected by minimum wage laws
• Most hourly workers are non-exempt

Exempt Employees

• Not entitled to overtime pay
• Must meet salary and duties tests
• Minimum salary: $684/week ($35,568/year)
• Executive, administrative, or professional duties
• Computer professionals, outside sales

State Overtime Variations

States can have more protective overtime laws than federal law, but not less protective. Here are common state variations:

Daily Overtime States

Some states require overtime pay for daily hours over 8, regardless of weekly total:

California: 1.5x after 8 hours/day, 2x after 12 hours/day
Nevada: 1.5x after 8 hours/day
Alaska: 1.5x after 8 hours/day
Colorado: 1.5x after 12 hours/day

Higher Salary Thresholds

Some states have higher salary requirements for exemption:

New York: $1,125/week ($58,500/year) for most exemptions
California: $1,280/week ($66,560/year) for most exemptions
Washington: $1,101.80/week ($57,293.60/year)

How Overtime Is Calculated

Regular Rate of Pay

The regular rate includes all compensation for hours worked, including:

Base hourly rate or salary converted to hourly
Shift differentials
Bonuses (if earned during the workweek)
Commissions (prorated over hours worked)
Non-discretionary bonuses

Overtime Calculation Example

Regular hours (40 × $20):$800.00

Overtime hours (5 × $30):$150.00

Total Pay:$950.00

Overtime rate = $20 × 1.5 = $30/hour

Common Overtime Scenarios

Salaried Non-Exempt Employees

Even salaried employees can be entitled to overtime if they don't meet exemption criteria. Their regular rate is calculated by dividing weekly salary by hours worked.

Commission-Based Employees

Commission employees are often non-exempt. Their regular rate includes commissions earned during the workweek, divided by total hours worked.

Compensatory Time

Private sector employers generally cannot offer comp time instead of overtime pay. Public sector employers have limited comp time options under specific conditions.

Compliance Requirements

Employer Responsibilities

• Properly classify employees as exempt or non-exempt
• Track all hours worked by non-exempt employees
• Pay overtime at 1.5x regular rate
• Maintain accurate payroll records
• Post required labor law notices
• Comply with both federal and state laws

Recordkeeping Requirements

• Employee name and social security number
• Hours worked each day and week
• Regular rate of pay and overtime rate
• Total wages paid each pay period
• Date of payment and pay period covered
• Records must be kept for 3 years

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FAQ

What is the federal overtime threshold?

The federal Fair Labor Standards Act (FLSA) requires overtime pay of 1.5x the regular rate for hours worked over 40 in a workweek. This applies to non-exempt employees regardless of how they are paid (hourly, salary, commission, etc.).

Are salaried employees exempt from overtime?

Not necessarily. Salary alone doesn't determine overtime exemption. Employees must meet specific duties tests and salary thresholds ($684 per week/$35,568 annually as of 2024) to be exempt from overtime requirements.

Can states have different overtime rules than federal law?

Yes, states can have more protective overtime laws than federal law, but not less protective. For example, California requires daily overtime after 8 hours, while federal law only requires weekly overtime after 40 hours.

What happens if I work overtime but my employer doesn't pay it?

You may file a complaint with the Department of Labor's Wage and Hour Division or pursue legal action. Employers who violate overtime laws may be required to pay back wages plus liquidated damages equal to the back wages.

References & Sources

• Fair Labor Standards Act (FLSA): 29 U.S.C. § 201 et seq.
• Department of Labor: Wage and Hour Division Fact Sheets
• Code of Federal Regulations: 29 CFR Part 541 (Exemptions)
• State Labor Departments: Individual state overtime laws
• Bureau of Labor Statistics: Overtime and Hours Worked Data
• Society for Human Resource Management (SHRM): Overtime Compliance Guidelines
• National Employment Law Project: State Overtime Law Summaries

Overtime Rules