US Overtime Rules Guide - Federal & State Laws Explained
Complete guide to overtime rules in the United States, including FLSA regulations, state-specific laws, daily vs weekly overtime requirements, exempt vs non-exempt classifications, and how to calculate overtime pay correctly.
Federal Overtime Rules (FLSA)
The Fair Labor Standards Act (FLSA) is the primary federal law governing overtime pay in the United States. Under FLSA, non-exempt employees must receive overtime pay at a rate of 1.5 times their regular rate for hours worked over 40 in a workweek. A workweek is defined as any fixed and regularly recurring period of 168 hours (7 consecutive 24-hour periods). Overtime is calculated weekly, not daily or over a pay period. This means if you work 45 hours one week and 35 hours the next week, you only receive overtime for the week you worked 45 hours.
Who Is Exempt vs. Non-Exempt?
Exempt employees are not entitled to overtime pay under FLSA. Common exemptions include: Executive exemption (managing others, significant authority), Administrative exemption (office or non-manual work related to management), Professional exemption (requiring advanced knowledge or education), Outside sales exemption (primarily making sales away from employer's place of business), Computer employees exemption (specific IT roles). To be exempt, employees must meet both salary basis requirements (typically $684+ per week as of 2020) and job duties tests. Most hourly employees are non-exempt and eligible for overtime. When in doubt, assume non-exempt status.
Daily vs. Weekly Overtime
Federal law (FLSA) requires only weekly overtime—hours worked over 40 in a workweek. However, some states have daily overtime requirements. California, Nevada, and Alaska require overtime for hours worked over 8 in a single day. California has particularly strict rules: 1.5x pay for hours over 8 in a day (even if weekly total is under 40), and 2x (double time) for hours over 12 in a day. In states with daily overtime, both daily and weekly overtime may apply, and employees receive the higher amount. Most states follow only the federal weekly standard.
How Overtime Is Calculated
Overtime pay = (Regular Hourly Rate × 1.5) × Overtime Hours. The regular rate includes hourly wages plus certain bonuses, commissions, and shift differentials. For salaried non-exempt employees, divide weekly salary by 40 to get the regular rate (unless a different agreement exists). The regular rate must include all compensation for hours worked, not just base pay. Employers cannot use a "fixed" overtime rate that doesn't account for all earnings. Overtime must be calculated separately for each workweek; employers cannot average hours across weeks.
State-Specific Overtime Laws
Several states have overtime laws that go beyond federal requirements. California requires daily overtime (1.5x after 8 hours, 2x after 12 hours) plus weekly overtime. Alaska and Nevada also have daily overtime requirements. Colorado requires overtime after 12 hours in a day or 40 hours in a week. Some states have different overtime thresholds or rates for specific industries. Most states follow federal standards but may have additional protections. State laws cannot reduce federal protections—employees get whichever provides more benefit. Always check your specific state's labor department for current requirements.
Common Overtime Scenarios
Scenario 1: Working 45 hours one week, 35 the next—only the week with 45 hours gets 5 hours of overtime. Scenario 2: Working 9 hours Monday (8 regular + 1 OT), then 7 hours Tuesday—in states with daily overtime, you get 1 hour OT from Monday even if weekly total is under 40. Scenario 3: Taking PTO during a week—PTO hours don't count toward overtime calculation; only actual hours worked count. Scenario 4: Working two jobs—overtime is calculated per employer, not combined. Scenario 5: Holiday pay—premium holiday pay doesn't affect overtime rate unless it's part of regular compensation for hours worked.
Compensatory Time (Comp Time)
Private employers generally cannot offer comp time (time off instead of overtime pay) to non-exempt employees. Comp time is only legal for: Government employees (federal, state, local), Limited situations with advance agreements in private sector (rare and restricted). Most private sector employees must receive overtime pay in their paycheck, not future time off. Offering comp time in violation of FLSA can result in back pay and penalties. Public sector employees may receive comp time at 1.5 hours for each overtime hour worked.
Overtime Violations and Your Rights
Common violations include: Misclassifying employees as exempt, Not paying overtime for all hours over 40, Averaging hours across pay periods, Not including all compensation in regular rate, Offering illegal comp time. If you believe your overtime rights have been violated, you can: File a complaint with the Department of Labor (DOL), File a complaint with your state labor department, Consult with an employment attorney. You may be entitled to back pay (unpaid overtime), Liquidated damages (equal to back pay), and attorney's fees. The statute of limitations is typically 2-3 years, but can be longer for willful violations.