Federal and state laws require most employers to pay overtime to their hourly employees who work more than 40 hours in a seven-day workweek. For each hour of overtime an employee works, the employer must pay at least one and one-half times the worker's regular hourly rate - commonly referred to as "time and a half."
Click here to read more about the U.S. Department of Labor's guidelines for overtime pay.
As is the case with most laws, overtime laws have some exceptions. Not all employees are entitled to overtime. And not all employers are required to pay it. To help you sort through the details, the following are answers to some commonly asked questions about overtime.
How is overtime determined?
For hourly employees (called "nonexempt"), federal and most state laws impose a weekly overtime standard. This means that nonexempt employees are entitled to overtime for every additional hour they work over the standard 40-hour work week. This standard focuses only on total weekly hours. It does not account for the number of hours an employee works in a day. For example, if an employee works a 12-hour day on a Monday, but he works less than a total of 40 hours during that week, he is not be eligible for overtime pay that week.
However, there are some exceptions
That's right, there are some exceptions as some states apply a daily overtime standard. In this case, nonexempt employees are also entitled to overtime for every hour they work in a day beyond the standard eight hours. So if the employee in the above example worked in California (a daily standard state), he would be entitled to overtime pay for the four extra hours he worked on Monday, even though his total hours for the week were under 40.
Who is NOT entitled to overtime?
Executive, administrative and professional employees who are paid a salary are generally "exempt" from receiving overtime pay. But even here, there are a few distinctions:
Salary Criteria: To be considered exempt, salaried employees must earn at least $455 per week. They also must receive the same salary every week, regardless of the amount of hours they work.
Job Duties: An exempt professional must also perform certain types of work. Typically, this work requires an advanced degree or knowledge in a specific field. Also considered exempt are managerial or supervisory roles; as well as positions that require high-level business decisions.
Other workers exempt from receiving overtime include: independent contractors, volunteer workers and outside salespeople that sell or take orders for goods and services for the employer's business.
Must all employers pay overtime?
The Federal Fair Labor Standards Act (FLSA) is the federal wage and hour law that states the overtime rules. FLSA guidelines require businesses earning more than $500,000 in annual sales to pay overtime to their employees.
Smaller businesses must also comply with FLSA if their employees conduct business between states. Referred to as "interstate commerce," this includes making phone calls to or from another state, sending mail out of state or handling goods that have come from or will go to another state. And even if you run a small, strictly local company, your business may still fall under your state's overtime law.