Under the federal Fair Labor Standards Act (FLSA), non-exempt employees must get at least 1.5 times their regular rate for every hour worked over 40 in a fixed workweek. Federal law has no daily overtime, but some states do. The regular rate includes most pay, such as nondiscretionary bonuses and shift differentials. You can’t average hours across weeks, and private employers can’t give comp time instead of overtime pay.
Most overtime errors come from small things: a bonus left out of the rate, hours averaged across a biweekly pay period, or a shift that ran long without anyone noticing. This guide covers the FLSA overtime rules that matter most, shows how overtime is calculated with worked examples, and ends with a checklist.
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Covered employers must pay non-exempt employees at least one and one-half times the regular rate for hours worked over 40 in a workweek. In practice:
The DOL’s Wage and Hour Division summarizes these rules in Fact Sheet #23: Overtime Pay Requirements of the FLSA.
A workweek is a fixed and regularly recurring period of 168 hours, meaning seven consecutive 24-hour periods. It can start on any day and at any hour, such as Wednesday at 12:00 a.m. Once you set it, keep it fixed. You can change it only if the change is meant to be permanent and isn’t made to avoid paying overtime.
Each workweek stands alone. Averaging hours across two or more weeks isn’t allowed. If someone works 50 hours in week one and 30 in week two, you owe 10 overtime hours for week one, even though the pay period totals 80.
The regular rate is generally total pay for the workweek, minus the payments the law excludes, divided by total hours worked that week. To run the numbers for a specific week, try our free overtime calculator.
Each exclusion has conditions, and calling a bonus “discretionary” doesn’t make it so. See the DOL’s Fact Sheet #56A on the regular rate and 29 CFR Part 778.
$20 per hour, 46 hours worked:
$18 per hour, 46 hours, plus a $92 weekly production bonus:
If you left the bonus out of the rate, the premium would be only $54. A bonus that covers several weeks, such as a quarterly bonus, generally has to be allocated back over the weeks in which it was earned.
Under 29 CFR 778.115, an employee who works at two or more rates in one workweek usually gets a weighted-average regular rate. Say 30 hours as a cashier at $16 and 15 hours as a shift lead at $22:
The regulations also allow overtime to be paid at 1.5 times the rate for the work done during the overtime hours, if the employer and employee agree in advance. That option has conditions, so confirm them before relying on it.
The FLSA looks only at weekly hours. When state law is more generous to the employee, you generally have to follow the state rule. Some examples:
Other states and cities have their own overtime and scheduling rules, and these change. Check your state labor department. For California break rules, see our guide to California meal and rest break rules.
The most common overtime exemptions are the “white-collar” exemptions for executive, administrative and professional employees (29 CFR Part 541). These generally require:
The salary level needs a careful read. A 2024 DOL rule would have raised the threshold, but a federal court in Texas vacated it in November 2024. In May 2026 the DOL published a technical amendment that formally rescinded the 2024 rule and restored the earlier regulations. As of this writing, the federal minimum is $684 per week ($35,568 per year), and the highly compensated employee threshold is $107,432 in total annual compensation. Several states, including California, Colorado, New York and Washington, set higher thresholds. Confirm the current federal and state figures before you classify anyone. If you’re unsure about a role, treat the employee as non-exempt or get legal advice.
Under the FLSA, compensatory time off in place of overtime pay is generally available only to public-sector employers, under specific rules. Private employers must pay overtime in wages. Bills to allow private-sector comp time have been introduced in Congress, but as of this writing none has become law.
Work you “suffer or permit” is generally hours worked, whether or not you asked for it. That includes answering messages before a shift, finishing tasks after clocking out, or working through an unpaid meal break. If you knew or should have known about the work, you generally have to pay for it, including any overtime it creates. You can enforce an overtime-approval policy through discipline, but not by refusing to pay for hours already worked. Rounding practices that consistently favor the employer cause similar problems. See our guide to time clock rounding rules.
Under 29 CFR Part 516, employers must keep records for non-exempt employees that include hours worked each workday and workweek, the regular rate, straight-time and overtime earnings, and when the workweek begins. Payroll records generally have to be kept for at least three years, and time cards and wage-calculation records for at least two. Some states require longer.
An accurate employee time clock helps. EZTime records punches through a GPS mobile time clock app or NFC tap-to-clock-in and produces payroll-ready exports for you to review. Your payroll process still has to apply the correct rates and rules.
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No. The FLSA requires overtime only after 40 hours in a workweek. Some states, including California, Alaska, Nevada (for certain lower-wage employees) and Colorado (after 12 hours), have daily rules.
Not if the employee also earns pay that belongs in the regular rate, such as nondiscretionary bonuses or shift differentials. You have to include those, and they usually raise the overtime rate.
No. Each workweek stands alone, so a 50-hour week followed by a 30-hour week means 10 overtime hours.
Generally yes, if the employee worked the hours and you knew or should have known. You can discipline employees for breaking the policy, but you still have to pay for the time.
As of this writing, it’s $684 per week ($35,568 per year), the level restored after the 2024 rule was vacated and then formally rescinded in 2026. Many states set higher thresholds.
Yes. Paying a salary doesn’t make someone exempt on its own. If the employee fails the duties test or earns below the threshold, they’re owed overtime.
State guides: see our Texas labor laws for employers and California meal and rest break rules.
How time clock rounding works under the FLSA and when it becomes risky.
Meal and rest break timing, waivers and premium pay in California.
Fair Workweek rules compared by state and city.
Accrual methods, caps, carryover and payout rules for PTO policies.
Download the free Excel template and learn how to fill it out.
This article is general information about U.S. overtime rules and isn’t legal advice. Laws, thresholds and interpretations change, and state and local rules vary. For your specific situation, consult a qualified employment attorney or your state labor department. EZTime provides time tracking and scheduling tools. It doesn’t guarantee legal compliance or calculate pay.