Under the FLSA, non-exempt employees must be paid at least 1.5 times their regular rate for every hour worked over 40 in a workweek. At $20/hour, your overtime rate is $30/hour. Employers who misclassify employees or fail to pay overtime face significant penalties.
- Federal overtime threshold: 40 hours per workweek
- Overtime rate: at least 1.5× regular hourly rate
- Applies to non-exempt employees regardless of pay method
FLSA Overtime Rules
The Fair Labor Standards Act (FLSA) is the federal law that governs overtime pay. It requires covered employers to pay non-exempt employees at least 1.5 times their regular rate of pay for all hours worked beyond 40 in a workweek.
A “workweek” is any fixed, recurring period of 168 hours (seven consecutive 24-hour periods). It does not have to align with the calendar week. Overtime is calculated on a workweek basis — hours cannot be averaged across multiple weeks.
Private-sector employers cannot offer compensatory time off (“comp time”) instead of overtime pay. Only government employers may use comp time as an alternative to OT pay.
Exempt vs Non-Exempt Employees
Not every employee qualifies for overtime. The FLSA exempts certain employees who meet both a salary test and a duties test.
| Test | Requirement |
|---|---|
| Salary Basis | Paid a fixed salary, not hourly |
| Salary Level | At least $58,656/year ($1,128/week) in 2026 |
| Duties Test | Primary duties are executive, administrative, or professional in nature |
All three conditions must be met for an employee to be classified as exempt. Job title alone does not determine exemption — the actual duties performed are what matter.
Giving someone a “manager” title does not automatically make them exempt. If their primary duties involve routine work rather than managing two or more employees and exercising independent judgment, they are likely non-exempt and entitled to overtime.
Calculating Overtime Pay
For hourly employees, overtime calculation is straightforward. For employees paid by salary, piece rate, or commission, you first need to determine the “regular rate” of pay.
Determine the Regular Rate
Multiply by 1.5
Apply to Overtime Hours
| Hourly Rate | OT Rate (1.5×) | 45-Hour Week Pay | 50-Hour Week Pay |
|---|---|---|---|
| $15.00 | $22.50 | $712.50 | $825.00 |
| $20.00 | $30.00 | $950.00 | $1,100.00 |
| $25.00 | $37.50 | $1,187.50 | $1,375.00 |
| $30.00 | $45.00 | $1,425.00 | $1,650.00 |
State Overtime Laws
Several states have overtime rules that go beyond federal requirements. When state and federal laws differ, the law most favorable to the employee applies.
Most states follow the federal standard of weekly overtime only (after 40 hours per week). Always check your state's Department of Labor for the most current rules.
Common OT Mistakes
| Mistake | Why It's Wrong | Correct Approach |
|---|---|---|
| Averaging hours across two weeks | FLSA requires weekly calculation | Calculate OT for each workweek separately |
| Excluding bonuses from regular rate | Non-discretionary bonuses must be included | Factor bonuses into the regular rate for OT calculation |
| Misclassifying employees as exempt | Title alone doesn't determine exemption | Apply both salary and duties tests |
| Not paying for pre/post-shift work | All hours worked must be compensated | Count time for setup, cleanup, and required training |
| Using comp time in private sector | Only public employers can offer comp time | Pay overtime wages for all OT hours worked |
Frequently Asked Questions
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