Key Takeaways

  • Overtime is generally owed when a non-exempt employee works over 40 hours in a workweek.
  • Some states require overtime pay after 8 or 10 hours in a single day.
  • Salaried employees may still qualify for overtime if they don’t meet specific exemption tests.
  • Starting in 2025, the federal salary threshold for exemption is set to increase.
  • Misclassification of employees can lead to legal and financial penalties.
  • Employers must follow both federal and state overtime laws—whichever is more favorable to employees.

Salary Overtime Laws

Salary overtime laws are implemented under the Fair Labor Standards Act (FLSA) and require certain employers to provide overtime pay to qualified employees. Generally, exempt employees are “exempt” from receiving overtime pay whereas non-exempt employees are eligible for overtime pay, depending on certain criteria that must be met, including the line of business and type of position in which the employee is engage in.

Federal vs. State Overtime Rules

While the Fair Labor Standards Act (FLSA) establishes a nationwide baseline, many states impose stricter rules. Federal law requires overtime pay for non-exempt employees working more than 40 hours per week. However, states like California, Alaska, and Nevada also require daily overtime after 8 hours worked in a single day, and even double-time in some cases. Colorado mandates overtime after 12 hours per day or 40 hours per week.

Employers must comply with whichever law—state or federal—is more favorable to the employee. This means understanding your local overtime laws is essential when determining when do you get overtime.

Exempt Employees

Exempt employees are those who receive an annual salary as opposed to an hourly rate. All exempt employees are paid for holidays when the company is closed. If such employees aren’t paid, the employer risks the status of the exempt employee being changed to non-exempt status, at which point employees can be paid overtime for the additional time worked over the ordinary 40 hours. In addition, if an exempt employee works on Christmas or any other federal holiday, he or she is not eligible for additional compensation or overtime pay.

Non-exempt Employees

Unlike exempt employees, non-exempt employees receive an hourly rate. Employers need not pay non-exempt employees additional compensation for holidays worked, although most companies will do so. Most companies will offer time and a half to non-exempt employee for working on a holiday. However, if a non-exempt employee doesn’t receive time and a half, any hours worked on top of the 40 hours will require overtime pay. Therefore, if a non-exempt employee works 45 hours in any given week, the additional five hours will require employers to pay time and a half.

How Overtime is Calculated

Overtime pay is calculated as 1.5 times the employee’s regular hourly rate. For example, an employee earning $20 per hour would receive $30 for each overtime hour.

Key factors in overtime calculation include:

  • Regular hourly rate: Includes base pay and may include commissions or non-discretionary bonuses.
  • Workweek definition: A fixed and recurring period of 168 hours (7 consecutive 24-hour periods).
  • Fluctuating workweek: If pay is based on a salary for varying hours, the overtime rate might be half the regular rate rather than 1.5x.

Who is Eligible?

If you are an employee who doesn’t work at least 80 percent of the time in an administrative, professional, executive, or sales capacity, then you have rights to overtime compensation. If an employee is in fact entitled to overtime pay, the employer must pay at a rate of 1.5 times the regular rate for all hours worked in excess of 40 hours in a workweek. Other types of employees who are exempt from receiving overtime pay include those working on a small farm or in the production of livestock, certain student workers, babysitters, elderly companions, seaman working on foreign vessels, small newspaper or telephone companies, newspaper delivery persons, seasonal employees, certain employees working on commission, railroad and air carrier employees, news and editorial staff, employees of motion picture theaters, and certain non-metropolitan broadcasting station employees. Moreover, managers are exempt from such overtime pay so long as they are in charge of two or more full-time employees, earn a salary of more than $455/week ($23,600/year), and have a say in the hiring and firing of such employees. In fact, all employees who earn at least $455/week are exempt from receiving overtime pay. However, that doesn’t mean that companies won’t offer it, it just means that they are not required to do so under the law. Such employees must also receive the same compensation every week, nothing more. Once the employee begins receiving more than the usual pay, his or her status as an exempt employee would likely be changed to a non-exempt employee; therefore, he or she would be eligible to receive overtime pay. However, if the employee takes an unpaid day off or it is within the employee’s first or last week of work, then the fluctuation in weekly pay is not at risk of changing an employee’s status. Further, there are certain instances in which employees receive additional compensation for bonuses or even business reimbursement expenses. These would also be examples when it is acceptable for the employee’s paycheck to fluctuate. The Department of Labor has proposed a rule to increase the minimum weekly salary from $455 to $970 in order to be exempt. This would increase the percentage of employees eligible for overtime pay.

New 2025 Salary Threshold for Exempt Employees

As of January 1, 2025, employees earning less than $1,128 per week ($58,656 annually) are automatically eligible for overtime under federal law, regardless of their job duties. This change significantly expands the pool of employees entitled to overtime pay.

Even salaried employees earning above this threshold must still meet the duties test for exemption. Employers should re-evaluate classifications regularly to avoid misclassification liabilities.

Can an Employer Lose the Exemption?

  • If the employer inadvertently improperly deducts from the employee’s pay, then the employer will lose the exemption unless it corrects the mistake and pays back the loss to the employee. The mistake provides for a safe harbor provision allowing the employer to correct the mistake within a certain timeframe.
  • If the employer has an actual practice of intentionally making improper deductions, then it will lose the exemption.
  • If the employer has a policy indicating that it prohibits improper deductions and reimburses for all inadvertent improper deductions, then it is required to provide a good faith effort to reimburse the employee as soon as possible. If the employee believes that the employer has violated the policy, then this could cause other legal problems for the company.
  • An employer cannot evade the overtime requirements by paying an employee a salary (making him or her non-exempt) when the job itself should, in fact, be non-exempt.
  • Employers can raise an exempt employee’s salary and prohibit overtime so long as the employees meet the duties test; this is similar to the above in which the duties of the position deem the position appropriate for an exempt employee as opposed to a non-exempt employee status.
  • An employer can, in fact, choose to pay overtime to exempt employees if it chooses to do so.
  • Employers can amend workload and staff hours to ensure that those who earn less are not being overworked, as those earning less generally try to work overtime to receive more money.
  • If an employer notices that its employees are working a lot of overtime, employers should consider bringing on additional staff to prevent high workloads and an excess of overtime.

Industries With Unique Overtime Rules

Some industries follow alternative overtime standards due to the nature of their operations. Examples include:

  • Healthcare: Hospitals and residential care facilities can adopt a 14-day period for overtime, provided employees receive time-and-a-half for hours worked beyond 8 in a day or 80 in a two-week span.
  • Law enforcement and firefighters: May qualify for different work periods under the 7(k) exemption.
  • Transportation: Interstate truck drivers may fall under the Motor Carrier Act exemption.
  • Agricultural workers: Often excluded from overtime under the FLSA but may be covered by state laws.

Employers in these sectors should consult both federal and local labor authorities to determine obligations.

When Are Deductions Acceptable for Exempt Employees?

If an employee is absent from work for one or more days for any personal reason other than an illness or disability, a deduction is permitted for exempt employees. However, absence due to a sickness or disability can still be deducted if the deduction itself is made in accordance with a company policy or practice. If the employee must take off for jury duty or military obligations, the pay is a proper deduction for exempt employees. If the employee needs to take off due to his or her own negligence in failing to abide by safety rules can also be deducted from an employee’s pay. Further, an employer need not pay the full salary in the exempt employee’s first or last week of employment unless the employee works the full week.

Other Important Rules and Requirements

  • Certain industries, including canneries, factories, and packing plants are required to provide overtime pay for working more than 10 hours in a day.
  • County, city, and school district workers should collect overtime after working in excess of eight hours a day.
  • Underground miners cannot work more than eight hours within a 24-hour period.
  • Police offers, firefighters, and those working in hospitals, residential care centers, and nursing facilities have unique overtime rules.
  • Employers must pay employees for time prepping to do the job. This can include changing into protective gear to do the job.
  • Employers must pay for finishing up the workday, which can include cleaning your workstation before leaving work.
  • Employers must pay for required training and other work-related meetings and events.
  • If you are on-call, you will only be paid for time actually worked.
  • Traveling time to/from work is generally not paid. However, if an employee is traveling for business, the days worked will be paid.

Common Overtime Misconceptions

Many employees and employers misunderstand key aspects of overtime eligibility. Common misconceptions include:

  • “Salaried means no overtime”: False—salary alone doesn’t determine exemption.
  • “Overtime only applies after 40 hours in a week”: Some states require overtime for daily hours.
  • “Comp time replaces overtime”: For private employers, compensatory time off cannot legally replace required overtime pay.
  • “Independent contractors don’t get overtime”: True, but misclassifying an employee as a contractor can lead to violations and penalties.

Understanding when do you get overtime requires a nuanced analysis of compensation, duties, and jurisdiction-specific laws.

Frequently Asked Questions

  1. When do you get overtime if you're salaried?
    You get overtime if you earn below the federal threshold ($1,128/week in 2025) or do not meet exemption duty tests, regardless of being salaried.
  2. Do all states follow the same overtime rules?
    No. States like California and Colorado have stricter rules, such as daily overtime after 8 or 12 hours.
  3. What is considered a “workweek” under overtime law?
    A workweek is any fixed, recurring 168-hour period (e.g., Sunday to Saturday) designated by the employer.
  4. Can an employer offer comp time instead of paying overtime?
    Private-sector employers must pay overtime in cash. Comp time is only allowed in the public sector.
  5. Who enforces overtime laws?
    The U.S. Department of Labor enforces federal rules. State labor departments enforce local laws and may offer additional protections.

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