In the modern workplace, overtime pay plays a critical role in protecting workers and ensuring fair compensation for long hours. Whether you’re an employee wondering if you qualify for extra pay or an employer managing compliance, understanding the rules around overtime is essential.
This article explains the overtime pay laws in the United States, including who qualifies, how it’s calculated, and what exceptions may apply — all in clear, practical terms.
Key Takeaways
- Overtime pay is typically 1.5 times the regular pay rate for hours worked over 40 per week.
- The Fair Labor Standards Act (FLSA) sets the federal baseline, but states may have additional protections.
- Exempt employees (executive, administrative, professional) are not eligible for overtime.
- Employers must maintain accurate records and comply with both federal and state laws.
- Employees have the right to fair compensation and can seek assistance from the Department of Labor if necessary.
What Is Overtime Pay?
Overtime pay refers to the additional compensation employees earn for working beyond a standard number of hours in a workweek. In most cases, U.S. law defines overtime as any work performed over 40 hours per week.
Under the Fair Labor Standards Act (FLSA) — the federal law governing minimum wage, overtime, and recordkeeping — covered employees must be paid at least one and one-half times their regular pay rate for every hour worked over 40 in a workweek.
For example, if an employee earns $20 per hour, their overtime rate would be $30 per hour (1.5 times the regular rate) for any hours beyond 40.
Federal Law vs. State Law
While the FLSA sets the minimum national standard, many states have their own overtime laws that may be more generous to employees. In those cases, the higher standard applies.
Examples include:
- California: Overtime starts after 8 hours in a single workday or 40 hours in a week. Double time is paid after 12 hours in a day.
- New York: Generally follows federal rules but may include additional protections for certain industries.
- Alaska, Nevada, and Colorado: Also have daily overtime rules.
Employees should check their state labor department website for specific local rules, since state and municipal laws can vary widely.
Who Qualifies for Overtime Pay?
Not every worker is entitled to overtime. Under the FLSA, employees are divided into “non-exempt” and “exempt” categories.
Non-Exempt Employees
These workers are covered by the FLSA’s overtime rules. They typically include:
- Hourly workers in most industries
- Retail, hospitality, manufacturing, and service employees
- Certain clerical or administrative staff
If you are non-exempt, you must receive overtime pay for hours worked beyond 40 in a week.
Exempt Employees
Some workers are exempt from overtime requirements, meaning employers are not legally required to pay them overtime. To qualify for exemption, employees must meet three main criteria:
- Salary Level Test – The employee earns at least a minimum weekly salary set by the U.S. Department of Labor (as of 2024, $684 per week).
- Salary Basis Test – The employee receives a fixed salary, not based on the number of hours worked.
- Job Duties Test – The employee’s primary duties fit into an exempt category, such as:
- Executive (managing other employees)
- Administrative (high-level office work related to business operations)
- Professional (lawyers, doctors, engineers, teachers, etc.)
Certain other exemptions apply for outside sales representatives, computer professionals, and some transportation workers under specific conditions.
How Overtime Pay Is Calculated
The basic formula for calculating overtime pay is:
Regular hourly rate × 1.5 × Overtime hours worked
However, determining the “regular rate” can be complex. It includes all earnings such as:
- Hourly wages
- Salaries converted to hourly equivalents
- Nondiscretionary bonuses (e.g., attendance or productivity bonuses)
- Commissions
It does not include items like:
- Gifts or discretionary bonuses
- Reimbursements for expenses
- Vacation or holiday pay
Example:
If an employee earns $18/hour and works 50 hours in one week:
- Regular pay: 40 × $18 = $720
- Overtime pay: 10 × ($18 × 1.5) = $270
- Total weekly pay = $990
Special Situations: Common Overtime Scenarios
Salaried Non-Exempt Employees
Even if an employee receives a fixed salary, they may still qualify for overtime if they don’t meet exemption criteria. Employers must calculate their hourly equivalent and apply overtime accordingly.
Multiple Jobs or Employers
If an employee works for two separate employers, overtime is calculated separately unless the employers are jointly controlled (for example, franchises under the same ownership).
Tipped Employees
Tipped workers (like restaurant servers) are entitled to overtime based on their full minimum wage rate, not their reduced cash wage.
Remote and Flexible Work
With remote work becoming common, tracking hours is more complex. Employers must still maintain accurate records of work hours and pay overtime for any hours exceeding 40 per week.
Common Overtime Violations
Despite clear rules, overtime violations still occur in many industries. Examples include:
- Misclassifying employees as “exempt” to avoid overtime
- Failing to include bonuses or commissions in the regular rate
- Requiring “off-the-clock” work, such as answering emails after hours
- Averaging hours over multiple weeks (not allowed under FLSA)
Employers must ensure transparent policies and accurate timekeeping systems to avoid compliance issues.
Employer Responsibilities
Under the FLSA, employers are required to:
- Keep accurate records of hours worked
- Properly classify workers as exempt or non-exempt
- Pay overtime promptly when due
- Inform employees of their pay rates and schedules
Failure to comply can result in back pay awards, penalties, and legal actions. Many companies conduct internal audits or consult HR professionals to ensure compliance.
Employee Rights and How to Address Issues
If an employee believes they were denied overtime pay unfairly, they can:
- Discuss the issue internally with HR or management.
- File a complaint with the U.S. Department of Labor’s Wage and Hour Division (WHD).
- Seek guidance through state labor agencies if local laws offer stronger protections.
It’s generally advisable to resolve misunderstandings through proper communication first, as many disputes stem from unclear policies rather than deliberate violations.
Final Thoughts
Overtime pay laws are designed to promote fairness and prevent overwork without proper compensation. For employees, understanding your rights helps ensure you’re paid accurately. For employers, compliance with FLSA and state laws helps build trust, avoid disputes, and maintain a productive workplace.
As the U.S. workforce continues to evolve — with hybrid schedules, flexible hours, and digital tools — clarity and transparency around overtime pay remain essential for every organization.
