Overtime can add a lot to a paycheck, and misclassification is one of the most common pay problems. Here’s how the federal rules work. State law can be more generous, and you get whichever rule is better for you.
The basic rule
Under the Fair Labor Standards Act (29 U.S.C. 207 (FLSA overtime)), covered non-exempt employees must be paid at least one and one-half times their regular rate for hours worked over 40 in a workweek. A workweek is a fixed, recurring period of seven days in a row. Hours generally can’t be averaged across two weeks.
The “regular rate” isn’t always your hourly rate
Non-discretionary bonuses, like production or attendance bonuses, and shift differentials generally have to be included when calculating the regular rate. Overtime is then figured on that higher rate. The detailed rules are in 29 CFR Part 778 (overtime compensation).
Exempt vs. non-exempt
Some executive, administrative, professional, computer and outside sales employees are exempt from overtime. To qualify for most of these exemptions, the job generally has to meet three tests: paid on a salary basis, salary at or above a minimum threshold, and job duties that actually match the exemption. The rules are in 29 CFR Part 541 (exemptions). A job title or simply being on salary is not enough.
The salary threshold has changed and been challenged in court over the years. Check the current figure on the U.S. Department of Labor overtime page rather than relying on an old article.
Common problems
- “Comp time” instead of overtime pay. Private employers generally can’t substitute this for overtime pay owed under federal law.
- Off-the-clock work: answering emails, required prep or post-shift tasks.
- Being labeled a “manager” while mostly doing the same work as hourly staff.
What to do
Keep your own record of hours worked. Ask HR or payroll how your status was decided. The Department of Labor’s Wage and Hour Division takes complaints confidentially. Many states have their own labor departments too.
Related: reading your pay stub ยท benchmarking your salary
General information, not legal advice.