Overtime is extra pay that certain employees earn if they work over 40 hours per week. Employees who are non-exempt qualify for overtime. If non-exempt employees work over 40 hours, then the FLSA mandates they are paid 1.5 times the employee’s regular wage.

For example, let’s say an employee’s regular wage is $10 an hour. That means that their overtime rate would be $15 an hour. If they worked 50 hours in a week, they’ve worked 10 additional overtime hours at $15 an hour, so they would get an additional $150 for their overtime pay that week. In total, they’d earn $550 for the week:

$10 x 50 hours = $500 for their regular pay

+$5 x 10 hours = $50 for their overtime pay

As a big heads up, however, many states have additional specific laws on overtime pay. Please be sure to consult your state’s individual laws as well as a local HR or tax expert to ensure you’re compliant. This gets tricky!

Who does not qualify for overtime?

Not every employee gets overtime pay. The FLSA exempts certain employees from receiving overtime pay including those who are in the following positions:

  • Executive;
  • Administrative;
  • Professional;  and
  • Outside sales.

This is just scratching the surface, however. For more information on exempt employees, and how to determine if an employee qualifies as exempt, visit this Department of Labor page.

Who qualifies for overtime pay?

It’s time for jargony terms. If an employee is non-exempt, they qualify for overtime pay. According to the FLSA, every employee is non-exempt unless they’re exempt, so once you’ve identified your exempt workers, the rest qualify for overtime.

Are there state laws that cover overtime?

Yes, some states have passed laws that broaden the FLSA’s definition of overtime. For example, Nevada requires employers to pay overtime when an employee works more than 8 hour in one day.

Watch out: While some states have broadened the FLSA overtime rules, others have also added laws that exempt certain employees, and even industries, from their own laws on overtime. For example:

  • In Hawaii, any employee guaranteed $2,000/month or more is exempted from the state’s overtime law; and
  • In Vermont, state law exempts a variety of industries, including retailers, hotels, and restaurants, from the overtime rule. Be warned however, federal overtime requirements may still apply.

To see if your state’s laws are different from the FLSA, visit this National Congress of State Legislatures page or your state’s Department of Labor website.

Sound complicated? For help automating your state’s overtime rules for hourly employees, consider using a time tracking tool.

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