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

By Chris Kolmar - Jan. 22, 2021
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If you find yourself with a long work week, you might feel quite daunted. It takes extra time and energy to work those extra shifts and hours.

Thankfully, if you live in the United States and meet certain qualifications, you are guaranteed by law to be compensated. This is called overtime pay, and it is one of the most important rights for an employee to know.

What Is Overtime Pay?

In the United States, the Federal government passed the Fair Labor Standards Act (FLSA) in 2009.

Among other things, including minimum wage, the FLSA defined overtime pay, stating that “unless exempt, employees covered by the Act must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.”

This means that if you are a non-exempt employee covered by the FLSA, you are guaranteed by law to receive at least one and a half times your regular pay rate if you work more than 40 hours in a workweek.

It seems pretty straightforward, but there are some things to unpack to understand your rights as an employee better.

Who Is Covered by the FLSA?

The FLSA covers employees who work for enterprises that meet any of the five following criteria:

  • The enterprise engages in interstate commerce.

  • The enterprise is a hospital or other healthcare institution.

  • The enterprise is a school or a higher education institution.

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

  • The enterprise crosses a threshold of over $500,000 annual volume of business.

The FLSA also covers domestic servants such as housekeepers who receive “at least $2,200 in 2020 from one employer in a calendar year, or if they work a total of more than eight hours a week for one or more employers.”

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Note that the FLSA covers around 135 million employees in the United States. Interstate commerce is widespread and results in many businesses falling under the FLSA.

However, just because you may be an employee affected by the FLSA, you still need to be non-exempt and work over 40 hours in a workweek to receive overtime.

Who Are Exempt and Non-Exempt Employees?

As defined by the FLSA, exempt employees are those that are exempt from overtime provisions.

According to the Department of Labor website, “exemptions are narrowly construed against the employer asserting them,” which means exemptions are strictly defined by law. The law also states that it is the responsibility of the employer to support an application for exemption.

As an employee, you are only exempt if your employer can prove that it fits within the defined parameters of the FLSA. If you are not sure whether or not you are exempt, you should carefully research the exact terms and conditions of exemption and bring this to your employer’s attention.

Some examples of exempt employees include certain retail salespeople, truck drivers, farmworkers, and computer professionals. However, note that each one of these professions comes with its own specific requirements for exemption.

For example, in sales, you are exempt from overtime if more than half your pay comes from commission, and you make on average more than one and half times the minimum wage for the hours you worked.

There is also a salary base requirement for exemption. You are exempt if you are a salaried employee, which means you “regularly receive a predetermined amount — each pay period on a weekly, or less frequent basis,” and you make more than $684 a week.

Again, like most laws, certain requirements also need to be fulfilled to be a salaried exempt employee. If you have any concerns, you should check your employment contract and compare it to the FLSA.

So unless you fall into a category defined by the FLSA, you are a non-exempt employee and are guaranteed overtime pay for situations where it is appropriate.

What Is a Workweek?

Since we are talking about working more than 40 hours in a workweek, we need to define what is a workweek.

A workweek, defined by FLSA, is a fixed and regularly recurring period of 168 hours, which is seven consecutive 24 hour days. This means a workweek does not have to follow a calendar week and can begin and end at any point as long as it meets the stated definition.

You should carefully note that overtime is based on a single workweek. In most situations, you cannot average hours over the course of several workweeks to achieve overtime.

Again, like the exemption requirements, there are certain adjustments based on the type of job. If you have questions, you should review your employment contract and the FLSA.

Hospitals and similar institutions are exempt from this rule and can choose either the 40-hour workweek definition or apply the “8 and 80” exception where overtime is paid for “all hours worked in excess of 8 in a workday and 80 in a fourteen-day period”. An employee cannot receive both types of overtime and must establish which type with the employer beforehand.

Weekends, Holidays, Part-Time and Full-Time

You should understand that the FLSA is strictly defined. You may think that you should get overtime pay when you work on weekends and holidays.

However, the FLSA only covers overtime during a workweek and does not specify overtime for weekends and holidays. Any change in pay during these times is based on contractual agreements between you and the employer.

The FLSA also does not define a difference between part-time or full-time workers. This is a definition made by the employer.

Overtime is therefore guaranteed to any worker, whether they are full or part-time, as long as they meet the requirements of being a non-exempt employee who works more than 40 hours in a workweek.

State Overtime vs. Federal Overtime

Many states have their own labor laws that deal with overtime pay. There may be differences in the definition of exemptions and what amount of hours worked qualifies for overtime pay. By federal law, all states must abide by the rules of the FLSA.

In states where their own labor law and the FLSA apply, the law that sets the higher standard is followed. This means the law that is more beneficial to the worker and provides the greater amount of pay decides the type of overtime received.

For example, in Alaska, California, Colorado, and Nevada, overtime pay is based on the number of hours worked in a day, not a week. If you work more than eight hours a day in Alaska, your overtime pay is one and a half your normal hourly rate.

In states that have less stringent overtime laws, their laws will only apply to you if the FLSA does not already cover you. Remember, the FLSA is applied as long as it meets the necessary standards. If you work in a state with no overtime law, then you are subject only to the FLSA as long as you fall under their qualifications.

As you can see, this is why it is very important to review your employment contract with HR whenever you have any questions about overtime pay. The overtime you receive not only depends on your type of work but also where you work.

Double Time Pay

You may have seen others receive something called double time pay when they have worked special hours. This can be certain types of overtime, times of the day, or for holidays. Double time pay is exactly what it sounds like, and it is twice the amount of your normal pay rate.

You can normally have a salary or hourly pay rate, but the double time pay will be calculated hourly.

For example, pretend you are a train driver for your city’s subway system. You work on Christmas Day, and you receive double-time pay. Your normal rate is $21.00 an hour, so your rate becomes $42.00 an hour on Christmas Day.

When Double Time Is Paid

Double time, unlike overtime, is not guaranteed by U.S. law in any way. As of 2020, only one state, California, has a double time law.

Under their laws, employers must “double the employee’s regular rate of pay for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.”

You may still be entitled to double time pay. However, that is based on your contract with your employee.

For example, some unions use collective bargaining to achieve double time under certain conditions. If you have any questions regarding your specific situation, you should refer to your employment contract as well as your state and local labor laws.

How Overtime Pay Is Calculated

So overtime pay is calculated based on your job situation and your location. If you live in a state without its own overtime laws or with laws that are less beneficial than the Federal standard, then you would apply the FLSA method to calculate your overtime.

You would take the number of hours worked that exceeded 40 within your workweek and multiple it by one and a half times your regular hourly rate. For example, if you worked 47 hours in a week and your normal rate is $16 dollars an hour, then you would multiply the seven excess hours by 24 to get an overtime pay of $168 in total.

In most situations, this is how you would calculate your overtime; however, remember certain states are subject to changes. Your overtime will always be determined by the law that benefits you the most.

Remember also that overtime pay, just like normal pay is subject to Federal and State taxes, and you should check with your employer to see how exactly your overtime pay is taxed.

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Chris Kolmar

Author

Chris Kolmar

Chris Kolmar is a co-founder of Zippia and the editor-in-chief of the Zippia career advice blog. He has hired over 50 people in his career, been hired five times, and wants to help you land your next job. His research has been featured on the New York Times, Thrillist, VOX, The Atlantic, and a host of local news. More recently, he's been quoted on USA Today, BusinessInsider, and CNBC.

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