Introduction to Overtime
Understand overtime requirements and eligibility based on federal, state, and company rules.
Overtime pay: Federal, state, and company-level requirements
Goals and takeaways
- Understand how and when overtime applies under federal, state, and company rules
- Determine employee eligibility for overtime pay
- Identify state-specific rules that go beyond the federal Fair Labor Standards Act (FLSA)
Federal definition of overtime
Under the FLSA, overtime pay is required at 1.5× the regular hourly rate for non-exempt employees who work more than 40 hours in a workweek. A workweek is a fixed, recurring period of 168 consecutive hours (7 days x 24 hours). It does not need to align with the calendar week.
Employers must comply with FLSA unless stricter state or local rules apply.
Determining employee type: Exempt vs. non-exempt
Overtime eligibility begins with employee classification:
Exempt employees must meet all of the following (as of January 1, 2024):
- Earning level: At least $684 per week ($35,568 annually)
- Salaried: Paid on a salary basis
- Job duties: Executive, administrative, professional, computer, or outside sales duties that meet exemption tests
If an employee does not meet all three criteria or performs non-exempt duties for a significant amount of time, they must be treated as non-exempt and paid overtime accordingly.
State-level overtime rules
Overtime rules are determined by the employee’s work location, not the employer’s headquarters. If a state has more generous overtime rules than federal law, the employer must follow the more favorable standard.
Examples:
- An employer based in Georgia (follows federal) must apply California rules for a remote employee working in California.
States following federal rules (as of Jan 29, 2024)
Most states use the FLSA standard: 1.5× pay for hours worked over 40 in a workweek.
Examples include: | |
Florida | Ohio |
Texas | North Carolina |
Michigan | Pennsylvania |
New York | Wisconsin |
Exceptions: States with unique overtime rules
State | Daily OT (1.5x) | Daily OT (2x) |
Alaska | 8 hrs | |
California | 8 hrs | 12 hrs |
Colorado | 12 hrs | |
Nevada | 8 hrs (if making under 1.5× minimum wage) |
Rare exceptions
State | Threshold (only if FLSA doesn't apply) |
Kansas | 46 hrs/week |
Minnesota | 48 hrs/week |
Company or industry-level exceptions
Some industries are governed by unique rules set by collective bargaining agreements (CBAs) or state law. These standards may override both federal and state models.
Examples:
- Hospital workers may fall under the "8/80" rule:
- Overtime applies after 8 hours in a day or 80 hours in a 14-day period
- Employers must apply whichever rule results in more pay to the employee
Such rules are common in public safety, health care, and unionized industries.
Key considerations
- The most employee-favorable rule applies, whether federal, state, or contract-based
- Weighted overtime applies when employees work at multiple rates and requires additional calculation
- Employers must monitor both hours worked and the regular rate of pay to ensure accurate overtime pay
Conclusion
Overtime requirements vary based on employee classification, work location, and industry. While the FLSA provides a baseline, many states and industries require stricter standards. Employers and product developers should support flexibility in how overtime rules are configured and ensure calculations reflect the most employee-advantageous standard.
For additional complexity, such as weighted overtime calculations, consult the relevant labor authority or review Check guidance for calculating average regular rate of pay.
Last updated on June 7, 2025