Overtime Pay Laws by State: A Guide

Overtime pay can be a tricky subject to navigate.

At what point does the work begin to count as overtime? What do you multiply each hour spent working overtime by? Are all employees eligible for overtime pay?

These questions are understandably intimidating, as is any concern that involves legal matters. However, there’s no need to worry — we’ve prepared a guide that can help you better understand overtime pay laws.

Overtime pay laws are legal guidelines that mandate employers pay employees at a premium rate once they exceed the standard workweek requirement.

These laws exist to protect employees from being overworked while ensuring that they are fairly paid for any additional work. Whether you’re a startup or an established corporation, you are strictly required to provide higher compensation than the regular rate of pay for every minute that’s considered overtime work, should you qualify.

Federal overtime laws are covered under the Fair Labor Standards Act or FLSA, which requires employers to pay their employees 1.5x of their hourly rate for any time worked over the 40-hour workweek.

It’s important to know that not every state has specific laws on overtime pay. In this case, employers should follow federal laws by default, then state law on top of that.

In cases where employees are covered by both federal and state overtime regulations, employers are required to process their pay according to the law that provides their team members with the highest earnings.

But what if you have remote employees from different states?

According to The National Law Review, “Remote employees are generally subject to the laws of the city and state where they are physically located and perform work.” If you are based in New York but have an employee working from Alaska, you must follow Alaska’s overtime laws for that particular employee.

In most cases, salaried professionals earning upwards of $455 per week ($23,660 annually) are considered “exempt” from overtime pay under the Fair Labor Standards Act (FLSA).

Exemptions from labor laws can also be applied to industries such as agricultural workers, salespeople earning commissions, seasonal workers, and vehicle drivers. Due to the various considerations laid out in the FLSA, it is recommended to consult your local Wage and Hour Division office for further information.

How do daily overtime laws work?

Imagine you have two employees in different states: Person A from California and Person B from Texas. Below are their respective weekly timesheets. To keep things simple, let’s say that they both have a rate of $10 per hour.

Note: These are only examples; the state minimum wage in California is $15.00 per hour.

Non-exempt employees

As of January 1, 2020, a new rule raised the threshold for a worker to be considered non-exempt from those earning less than $455 per week (approx. $23,600 per year) to anyone earning less than $684 per week (approx. $35,568 per year). An estimated 1.3 million additional U.S. workers will now be considered non-exempt and so must be paid federal minimum wage for overtime and are covered by existing FLSA regulations, regardless if they’re on an annual salary or paid an hourly wage.

For small business owners, this means they’ll need to be more diligent than ever to ensure they’re accurately tracking the time worked for the now larger group of non-exempt employees that will fall under overtime laws.

Overtime pay for hourly employees

In many cases, employees who fit into this criteria are considered non-exempt, which is why it is vital to keep close track of their timesheets when calculating overtime pay for hourly workers.

Some common industries that are classified as “non-exempt” may include:

• Restaurants or retail

• Service businesses such as landscaping

• Cleaning companies with hourly staff

Overtime pay for salaried employees

Generally referred to as “salaried” workers, exempt employees are usually assigned regular hours of work per day and are paid a set salary.

It is agreed that the worker will complete their given tasks in line with their employer’s expectations regardless of how many hours they put in. Due to this, salaried employees are often not paid for working overtime.

There are several types of exempt classifications, but common exempt workers are:

• Executives and managers

• Professional in service industries (accountants, architects, designers)

• Administration-related jobs

The FLSA does not define a maximum limit on the number of hours an employer can require an employee to work. So, salaried workers can be required to work mandatory overtime and can be terminated legally for refusing to do so. However, a condition of this rule is that working overtime must not present a safety risk to workers.

Salaried employees and overtime eligibility

Overtime laws for salaried employees can be confusing, as earnings and industry-related conditions allow typically exempt workers to qualify for overtime.

Salaried workers earning below $684 per week ($35,568 annually), for example, may be entitled to overtime, depending on their duties, responsibilities, tasks, and industry.

Most states follow the 40-hour rule stated in the FLSA, with two exceptions: Kansas (46 hours) and Minnesota (48 hours).

Some states have daily overtime laws. Employers are required to pay overtime rates once an employee works beyond a certain number of hours per day in these locations.

How do daily overtime laws work?

Imagine you have two employees in different states: Person A from California and Person B from Texas. Below are their respective weekly timesheets. To keep things simple, let’s say that they both have a rate of $10 per hour.

Note: These are only examples; the state minimum wage in California is $15.00 per hour.

Example 1: State with daily overtime laws

Person A didn’t work more than 40 hours, which wouldn’t qualify as overtime in other states. However, any work performed over 8 hours in a day is classified as overtime under California law. The equation becomes as follows:

Example 2: State without daily overtime laws

Person B, on the other hand, exceeded the 40-hour mark by 5 hours in a state without daily overtime laws. It’s easier to compute in this case:

Additional considerations apply to the 7th consecutive day of work. The first 8 hours of the 7th consecutive day worked in a workweek must be paid at one-half times (1.5x) the employee’s regular rate.

If you are looking to calculate overtime pay per hour specific to your state, we recommend getting in contact with your local Wage and Hour Division office for further information.

Important Notice: The information in this article is general in nature and you should consider whether the information is appropriate to your needs. Legal and other matters referred to in this article are of a general nature only and are based on Hubstaff’s interpretation of laws existing at the time and should not be relied on in place of professional advice. Hubstaff is not responsible for the content of any site owned by a third party that may be linked to this article and no warranty is made by us concerning the suitability, accuracy or timeliness of the content of any site that may be linked to this article. Hubstaff disclaims all liability (except for any liability which by law cannot be excluded) for any error, inaccuracy, or omission from the information contained in this article and any loss or damage suffered by any person directly or indirectly through relying on this information.