Overtime Pay: What It Is And What You Need To Know

Long workweeks can feel overwhelming, requiring significant time and energy. However, if you are based in the United States and meet specific criteria, you are legally entitled to overtime compensation. Understanding overtime pay is crucial for every employee.

Key Takeaways:

• Overtime pay is compensation mandated for non-exempt employees working over 40 hours in a workweek, calculated at a minimum of 1.5 times their regular pay rate.

• Current overtime regulations are governed by the Fair Labor Standards Act (FLSA), which protects approximately 143 million American workers.

• To be classified as exempt from overtime, employees must earn at least $684 per week and meet specific job duty criteria.

• A workweek is defined as a fixed and regularly recurring period of 168 hours.

• State overtime laws take precedence when they provide greater benefits to employees than federal regulations.

What Is Overtime Pay?

The Fair Labor Standards Act (FLSA), initially enacted in 1938 and updated periodically, establishes the framework for overtime pay. The FLSA mandates that, unless exempt, covered employees must receive overtime compensation for hours worked beyond 40 in a workweek at a rate of at least one and a half times their regular pay.

This means that if you are a non-exempt employee under the FLSA, you are legally guaranteed overtime pay if you exceed 40 hours in a workweek.

Who Are Exempt Employees?

Exempt employees, as defined by the FLSA, are those who do not qualify for overtime pay. According to the Department of Labor, “to qualify for exemption, employees generally must meet specific tests regarding their job duties and be paid on a salary basis of not less than $684 per week.”

Your employer must demonstrate that you fit within the FLSA’s exemption criteria.

Exempt categories typically include:

• Executive.

• Administrative.

• Learned professional.

• Creative.

• Computer employee.

• Outside sales.

• Highly compensated employees.

These requirements are established by the Department of Labor and the FLSA, with exemptions typically applying only to white-collar workers. Blue-collar employees and first responders are generally entitled to overtime pay.

Who Is Covered by the FLSA?

The FLSA applies to employees working for enterprises that meet any of the following criteria:

• The enterprise engages in interstate commerce.

• The enterprise is a hospital or healthcare institution.

• The enterprise is a school or higher education institution.

• The enterprise is a Federal, State, or Local government agency.

• The enterprise exceeds $500,000 in annual business volume.

• Domestic workers, such as housekeepers, earning at least $2,200 in 2020 from a single employer or working more than eight hours a week for one or more employers.

Approximately 143 million employees in the U.S. are covered by the FLSA, which encompasses a wide range of industries and occupations. However, to qualify for overtime, you must be a non-exempt employee working over 40 hours in a workweek.

Overtime: What Is a Workweek?

A workweek, as defined by the FLSA, is a fixed and regularly recurring period of 168 hours, equivalent to seven consecutive 24-hour days. This means a workweek does not have to align with a calendar week.

Overtime is calculated based on a single workweek, meaning hours cannot be averaged across multiple weeks to qualify for overtime.

However, certain institutions, like hospitals, may choose the “8 and 80” system, where overtime is calculated for “all hours worked in excess of 8 in a workday and 80 in a 14-day period.” Employees must clarify with their employer which system applies.

Overtime For Weekends And Holidays

The FLSA does not specify overtime pay for weekends or holidays; any additional pay during these times is typically governed by contractual agreements between the employee and employer.

Overtime For Part-Time And Full-Time Employees

The FLSA does not distinguish between part-time and full-time workers regarding overtime eligibility. Overtime is assured to any worker, regardless of their employment status, as long as they qualify as a non-exempt employee working over 40 hours in a workweek.

State Overtime vs. Federal Overtime

Many states have their own labor laws concerning overtime pay, which may vary in definitions and qualifications. When comparing state and federal overtime regulations, the law that is more favorable to the employee prevails.

For instance, in states like Alaska, California, Colorado, and Nevada, overtime is based on daily hours; working more than eight hours in a day qualifies for overtime pay at one and a half times the regular rate.

In states with less stringent overtime laws, those laws only apply if the FLSA does not cover the employee. If no state law exists, the FLSA governs overtime eligibility.

Double Time Pay

Double time pay refers to compensation that is twice the employee’s normal pay rate, applicable in specific situations such as holidays or special shifts. While it sounds straightforward, double time is not mandated by federal law.

As of 2020, only California has specific double time laws requiring employers to pay double for hours worked over 12 in any workday and for hours worked over eight on the seventh consecutive day of work. Double time eligibility may also be negotiated through employment contracts or union agreements.

When Double Time Is Paid

Unlike overtime, double time pay is not guaranteed by federal law and is subject to state regulations and employment contracts. It’s crucial to review your employment agreement for potential double time provisions.

How Overtime Pay Is Calculated

Calculating overtime pay depends on your specific employment situation and location. If you’re in a state without its own overtime laws or with laws less favorable than the federal standard, use the FLSA method for calculations.

To calculate overtime, multiply the number of hours worked over 40 in a workweek by one and a half times your regular hourly rate. For example, if you worked 47 hours at a rate of $16 per hour, your overtime pay would be calculated as follows: 7 hours (overtime) x $24 (1.5 x $16) = $168 total in overtime pay.

Always remember, overtime pay, like regular pay, is subject to federal and state taxes. Consult your employer for details on how your overtime pay will be taxed.

References

Department of Labor. “Overtime Pay” Accessed on November 30, 2022.

Author

Taylor Berman

Taylor Berman is a key contributor to the Zippia content team in charge of editing, fact checking, and maintaining content relevance over time. She enjoys writing articles that help people with their job search and creating stories that inspire people. Taylor earned a bachelor's degree in journalism and public relation with an interest in communications media from Indiana University Of Pennsylvania.