The Fair Labor Standards Act (FLSA) is the federal law behind overtime pay in the United States, enforced by the U.S. Department of Labor’s Wage and Hour Division (WHD). Its core rule fits in one sentence, but the details (who is exempt, what a workweek is, which payments raise the overtime rate) are where most payroll mistakes happen.
The basic overtime rule
Under 29 U.S.C. § 207, a covered, non-exempt employee must be paid at least 1.5 times their regular rate of pay for every hour worked over 40 in a workweek. Three terms matter most:
- Non-exempt: not excluded from overtime by an FLSA exemption.
- Regular rate: often more than the posted hourly rate, because it can include bonuses.
- Workweek: a fixed seven-day period, not a pay period or a month.
Most employers are covered: businesses with at least $500,000 in annual sales, plus hospitals, schools and public agencies of any size. Employees of smaller businesses are usually covered individually if their work involves interstate commerce, such as handling out-of-state calls, mail or card payments.
Exempt vs. non-exempt employees
An employee is exempt under the common “white-collar” exemptions (executive, administrative and professional) only if all three tests are met:
| Test | What it requires |
|---|---|
| Salary basis | A predetermined salary that is not reduced because of the quality or quantity of work |
| Salary level | At least $684 per week ($35,568 per year) under the threshold currently enforced |
| Duties | A primary duty that is genuinely executive, administrative or professional as defined in 29 CFR Part 541 |
The $684 figure dates from 2019. The Department of Labor raised it in 2024, but a federal court vacated that rule in November 2024, so the 2019 levels apply. Highly compensated employees earning at least $107,432 a year face a lighter duties test, and outside sales employees, teachers, lawyers and doctors are exempt without meeting the salary tests.
Common misconceptions:
- A salary does not make you exempt. Salaried employees who fail the duties test are owed overtime.
- Job titles do not matter. A “manager” who mostly runs a register may be non-exempt.
- Overtime cannot be waived. An agreement to work extra hours at straight time is not enforceable.
- Unauthorized overtime still counts. If the employer knows or should know about the work, it must be paid; the employer can discipline the employee but cannot withhold the pay.
Narrower exemptions also exist, for example for some agricultural workers and interstate truck drivers.
How the workweek works
A workweek is a fixed and regularly recurring period of 168 hours: seven consecutive 24-hour periods. The employer chooses when it starts (it need not be Sunday) and can change it only permanently, not to avoid overtime.
Each workweek stands alone. Hours cannot be averaged across two weeks, even when payroll runs biweekly:
| Week | Hours worked | Overtime hours |
|---|---|---|
| Week 1 | 30 | 0 |
| Week 2 | 50 | 10 |
| Pay period | 80 | 10 (not 0) |
Because only weekly hours count, a 12-hour shift creates no federal overtime if the week totals 40 or less. For a two-week period, the biweekly time card calculator applies the 40-hour test to each week separately.
How the regular rate is calculated
Overtime is 1.5 times the regular rate: total straight-time pay for the workweek divided by total hours worked (29 CFR Part 778).
Included: hourly wages, salary paid to non-exempt staff, nondiscretionary bonuses (attendance, production, safety or retention bonuses promised in advance), shift differentials, commissions and on-call pay.
Excluded: gifts and discretionary bonuses, pay for hours not worked (vacation, holidays, sick days), expense reimbursements, and premium pay that already counts as overtime.
Worked example: an employee earns $20 an hour, works 45 hours and receives a $90 production bonus.
Straight-time pay: 45 × $20 = $900. Add the bonus: $900 + $90 = $990.
Regular rate: $990 ÷ 45 = $22.00.
Overtime premium: 0.5 × $22.00 × 5 overtime hours = $55.00.
Gross pay: $990 + $55 = $1,045.00. Leaving the bonus out of the rate would pay $1,040.00, which is $5 short.
The premium is half the regular rate because straight-time pay for all 45 hours is already in the $990. Two common variations:
- Two rates in one week. If someone works 30 hours at $22 and 15 hours at $16, the regular rate is the weighted average: ($660 + $240) ÷ 45 = $20.00. The premium is 0.5 × $20.00 × 5 = $50.00, for gross pay of $950.00.
- Salaried non-exempt employees. Divide the weekly salary by the hours it is meant to cover. A $1,000 salary for a 40-hour week works out to $25.00 an hour, so each overtime hour pays at least $37.50. The salary to hourly calculator does the division.
To run your own numbers, use the overtime calculator, or see calculate overtime in Excel for spreadsheet formulas, including bonuses.
What counts as hours worked
Under 29 CFR Part 785, any time an employee is “suffered or permitted” to work counts, requested or not.
| Usually counts | Usually does not count |
|---|---|
| Rest breaks of 5–20 minutes | Meal periods of 30+ minutes, fully relieved of duty |
| Required training and meetings | Voluntary, off-hours training unrelated to the job |
| Travel between job sites during the day | The normal home-to-work commute |
| On-call time restricted to the premises | On-call time at home with few restrictions |
| After-hours work the employer knows about | Off-duty time when completely free to leave |
Employers may round punches to the nearest 5, 6 or 15 minutes only if the practice averages out over time and does not consistently favor the employer (29 CFR 785.48(b)).
What the FLSA does not require
Federal law sets a floor. It does not require:
- Overtime after 8 hours in a day; only hours over 40 in a week count
- Double time for any hours
- Premium pay for weekends, holidays or nights, unless those hours push the week past 40
- Rest breaks or meal periods
- Paid vacation, sick leave or holidays
- Limits on daily or weekly hours for employees 16 and older
State overtime rules
When state law is more protective than the FLSA, the employer must follow the state rule. Some examples:
| State | Daily overtime | Weekly overtime | Notes |
|---|---|---|---|
| California | 1.5× over 8 hours; 2× over 12 | 1.5× over 40 | 7th consecutive workday: 1.5× for the first 8 hours, 2× beyond 8 |
| Alaska | 1.5× over 8 hours | 1.5× over 40 | Employers with 4 or more employees |
| Colorado | 1.5× over 12 hours, or 12 consecutive hours | 1.5× over 40 | — |
| Nevada | 1.5× over 8 hours in a 24-hour period | 1.5× over 40 | Daily rule covers employees earning under 1.5× the state minimum wage |
Many states also set a minimum wage above the federal $7.25 an hour, which raises the floor under the regular rate.
Comp time and recordkeeping
Private employers cannot give compensatory time off instead of overtime pay, even if the employee prefers it. They can rearrange hours within the same workweek: someone who works 10 hours a day Monday through Thursday can take Friday off, so the week totals 40. Public agencies are different. Under 29 U.S.C. § 207(o), state and local governments may give comp time at 1.5 hours per overtime hour, up to 240 hours (480 for public safety, emergency and seasonal work).
Under 29 CFR Part 516, employers must record each non-exempt employee’s daily and weekly hours, the workweek start, the regular rate, straight-time and overtime earnings, deductions and total wages. Payroll records must be kept for 3 years, and time cards for 2 years. Any accurate method works, from a time clock to a paper timesheet.
Keep your own record too. A printable timesheet and the guide on how to fill out a timesheet make that easy.
If you think you were not paid overtime
- Compare your records with your pay stub. Check hours per workweek, the rate used and whether bonuses were included.
- Ask payroll or HR in writing. Many errors are clerical. Keep copies of emails, schedules and pay stubs.
- File a complaint with the Wage and Hour Division. Complaints are free and confidential, and the WHD enforces the law regardless of immigration status. Call 1-866-487-9243 or contact a local WHD office; your state labor department handles state-law claims.
- Consider a private lawsuit, usually with an employment attorney.
Back-wage claims generally must be brought within 2 years, or 3 years for willful violations, and courts can award an equal amount in liquidated damages. The FLSA also prohibits retaliation against employees who complain or file a claim.
This guide summarizes federal rules for general information. It is not legal advice; state law may be stricter, and the facts of each job matter. For your situation, contact the Wage and Hour Division, your state labor agency or an employment attorney.
Frequently asked questions
Can my employer require me to work overtime?
Under federal law, yes. The FLSA does not cap hours or ban mandatory overtime for employees 16 and older; it only requires that non-exempt employees be paid correctly for it. Some states restrict mandatory overtime in specific jobs, such as nursing.
Do vacation days or holidays count toward the 40 hours?
Not under the FLSA. Only hours actually worked count toward the 40-hour threshold, so a paid holiday plus 36 hours worked creates no federal overtime. Some employers count paid time off anyway as a policy choice, and union contracts may require it.
Is overtime based on the pay period or the workweek?
The workweek. Each fixed seven-day workweek is tested on its own, so a biweekly pay period with 30 hours in one week and 50 in the other owes 10 overtime hours, even though the period totals 80.
If I earn more than $684 a week, am I automatically exempt?
No. The salary level is only one of three tests. You must also be paid on a salary basis, and your primary duties must fit an executive, administrative or professional exemption. A well-paid employee doing non-exempt work is still owed overtime.
How far back can I recover unpaid overtime?
Federal claims generally reach back 2 years, or 3 years if the violation was willful. Courts can add an equal amount as liquidated damages, and some state laws allow a longer look-back period.