Understanding Overtime Pay Regulations
| Rule | Requirement | Notes |
|---|---|---|
| Standard overtime threshold | >40 hours/week | Federal minimum |
| Overtime rate | 1.5× regular rate | "Time and a half" |
| Salary threshold (2024) | $684/week ($35,568/yr) | Below = non-exempt (must get OT) |
| Salary threshold (2025, pending) | $1,128/week ($58,656/yr) | DOL proposed rule |
| Highly compensated employees | $107,432/year | Different exemption test |
| Daily OT (California) | >8 hours/day | CA-specific rule |
| Double time (California) | >12 hours/day | Also 7th consecutive day |
| Exemption | Requirements | Common Roles |
|---|---|---|
| Executive | Manages ≥2 employees, primary duty = management | Managers, supervisors |
| Administrative | Office work, exercises independent judgment | HR reps, analysts (if discretionary) |
| Professional (learned) | Advanced knowledge in science/learning field | Doctors, lawyers, engineers, accountants |
| Professional (creative) | Invention, imagination, originality | Artists, writers |
| Computer employee | Systems analyst, programmer, software engineer | Must earn $684/wk or $27.63/hr |
| Outside sales | Customarily away from employer's place of business | Field sales reps |
| Highly compensated | $107,432+/yr, regularly performs exempt duties | Various |
| State | Daily OT Threshold | Weekly OT Threshold | Notes |
|---|---|---|---|
| Federal (FLSA) | None | 40 hours | Minimum floor |
| California | 8 hours/day | 40 hours/week | Double time: >12 hrs/day or 7th day |
| Alaska | 8 hours/day | 40 hours/week | Similar to CA |
| Nevada | 8 hours/day (if <$17.20/hr) | 40 hours/week | — |
| Colorado | 12 hours/day | 40 hours/week | State minimum wage rules apply |
| All other states | None (federal only) | 40 hours/week | Some states have additional rules |
Overtime pay is additional compensation for hours worked beyond the standard workweek. Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive overtime pay at 1.5 times their regular rate for hours worked over 40 in a workweek. Some states have additional requirements that provide even greater protections. Our calculator helps you determine your total earnings including regular and overtime pay.
Understanding overtime rules is essential for employees to ensure they receive proper compensation and for employers to maintain compliance. Overtime violations are among the most common wage and hour complaints, making it crucial to understand how overtime pay is calculated.
Federal Overtime Rules (FLSA)
The 40-Hour Threshold
Under federal law, overtime is calculated on a workweek basis. A workweek is a fixed period of 168 hours (seven consecutive 24-hour periods). Non-exempt employees must receive 1.5 times their regular rate for all hours worked over 40 in a single workweek. Employers cannot average hours over multiple weeks to avoid overtime.
Exempt vs Non-Exempt Employees
Not all employees are entitled to overtime. Exempt employees, typically salaried workers in executive, administrative, professional, or outside sales roles earning above a certain threshold (currently $684 per week), may not qualify for overtime. The exemption depends on both salary level and job duties, not just job title.
Regular Rate of Pay
The regular rate includes base pay plus most additional compensation like shift differentials, non-discretionary bonuses, and commissions. Overtime is calculated on this total regular rate, not just the base hourly wage. For example, if you earn $20/hour plus a $2/hour shift differential, overtime is calculated on $22/hour, making your overtime rate $33/hour.
State Overtime Laws
California
California has some of the most protective overtime laws in the country. Employees earn overtime (1.5x) for hours worked over 8 in a day or 40 in a week. Double time (2x) applies after 12 hours in a day or after 8 hours on the seventh consecutive workday. This daily overtime calculation provides more protection than federal law.
Colorado
Colorado requires overtime after 12 hours in a workday or 40 hours in a workweek for certain industries, particularly hospitality and food service. Agricultural workers and some other categories have different rules. The state has been expanding overtime protections in recent years.
Alaska
Alaska requires overtime after 8 hours in a workday in addition to the federal 40-hour weekly threshold. This applies to most non-exempt employees regardless of industry, making Alaska one of the more protective states for overtime.
Nevada
Nevada requires daily overtime (1.5x) for hours worked over 8 in a day if the employee earns less than 1.5 times the minimum wage. Higher-paid employees are only entitled to weekly overtime under federal rules.
Calculating Overtime Pay
Basic Calculation
The basic overtime calculation is straightforward: multiply overtime hours by the regular hourly rate, then multiply by the overtime multiplier (usually 1.5). For 10 overtime hours at $20/hour: 10 x $20 x 1.5 = $300 in overtime pay. Add this to regular pay for total weekly earnings.
Effective Hourly Rate
When you work overtime regularly, your effective hourly rate increases. If you work 50 hours at $20/hour with 10 hours at 1.5x, your total pay is $1,100 ($800 regular + $300 overtime). Your effective rate is $22/hour ($1,100 / 50 hours). This is useful when comparing to salaried positions.
Impact on Annual Earnings
Regular overtime significantly increases annual earnings. Working just 5 hours of overtime weekly at $20/hour adds $150 per week, or $7,800 per year. At 10 overtime hours weekly, the annual boost is $15,600. However, remember that overtime taxes are not higher than regular pay taxes, despite common misconception.
Common Overtime Issues
Off-the-Clock Work
Employers cannot require or permit work without compensation. This includes checking emails after hours, pre-shift preparation, or post-shift cleanup. All compensable time counts toward the 40-hour threshold and overtime calculation.
Misclassification
Some employers incorrectly classify employees as exempt to avoid overtime obligations. If your duties do not truly meet exemption criteria or your salary falls below the threshold, you may be entitled to overtime. Job title alone does not determine exemption status.
Comp Time
Private employers cannot offer compensatory time off instead of overtime pay. While government employers may use comp time under certain conditions, private sector employees must receive cash overtime compensation when worked.
Tax Implications
Overtime pay is taxed as regular income, not at a higher rate. The misconception that overtime is taxed more heavily arises because additional income may push you into a higher marginal tax bracket. However, only the income in the higher bracket is taxed at the higher rate, and the additional earnings still increase your net pay.