Overtime Pay

Overtime pay is the premium wage the Fair Labor Standards Act (FLSA) requires for work beyond a set weekly threshold. Under 29 U.S.C. 207(a), a covered, non-exempt employee who works more than 40 hours in a workweek must be paid at least one and one-half times their regular rate for the excess hours. The threshold is weekly and federal law sets no daily overtime requirement, so working eleven hours one day and five the next triggers nothing on its own. A handful of states impose daily overtime, but the FLSA does not.

Two questions decide whether overtime is owed: is the employee covered, and is the employee exempt. Most employees are covered. The exemptions that matter for salaried staff are the "white collar" categories in 29 CFR part 541, executive, administrative, and professional, and each requires the employer to satisfy both a duties test and a salary test. Failing either one keeps the employee non-exempt and entitled to overtime, which is why a job title alone never settles the question.

The salary test is a dollar floor that has been unusually unsettled. The standard salary level currently in effect is $684 per week, or $35,568 a year, with a higher-compensated-employee threshold of $107,432 a year (29 CFR 541.600). A 2024 Department of Labor rule that raised these figures in two steps was struck down nationwide by a federal court in late 2024, and the Department later restored the earlier levels by regulation. Because any future rulemaking can move the floor again, an employer relying on the exemption should confirm the figure in force rather than assume a number from memory.

The regular rate is where employers most often go wrong. It is not the base hourly wage but a computed rate: total straight-time pay for the week, including nondiscretionary bonuses, shift differentials, and commissions, divided by hours worked (29 CFR part 778). Only genuinely discretionary bonuses are excluded. A production bonus paid for hitting a target has to be spread back across the hours it was earned in, which raises the regular rate and therefore the overtime due. Salaried non-exempt workers are covered too: a fixed weekly salary is converted to an hourly regular rate before the premium is figured.

The mechanics run in three steps: establish the regular rate, count the hours over 40, and pay one and one-half times the rate for those hours.

A hypothetical shows the simple case. Priya is paid $20 an hour and works 48 hours in one workweek with no bonus. Her first 40 hours are straight time: 40 × $20 = $800. Her 8 overtime hours are paid at 1.5 × $20 = $30 an hour, which is 8 × $30 = $240. Her gross for the week is $800 + $240 = $1,040.

Now add a nondiscretionary bonus to see why the regular rate matters. Suppose the same 48 hours also earned Priya a $96 production bonus. Her straight-time earnings for the week are 48 × $20 + $96 = $1,056, so her regular rate is $1,056 ÷ 48 = $22 an hour rather than $20. She has already been paid straight time for all 48 hours in that $1,056, so the overtime she is still owed is the extra half-rate on her 8 overtime hours: 8 × (0.5 × $22) = $88. Her gross for the week is $1,056 + $88 = $1,144. Left out of the regular rate, the bonus would have produced only $80 of overtime premium, so folding it in correctly added $8 of overtime pay on top of the $96 bonus itself.

What overtime pay protects

• It guarantees a non-exempt worker premium pay once weekly hours pass 40, regardless of what the employment contract says.
• It counts nondiscretionary bonuses and commissions, so an employer cannot shift pay into "bonuses" to shrink the overtime base.
• The right cannot be waived by agreement, and unpaid overtime can be recovered through the Department of Labor or a private lawsuit.

Where it falls short

• It is weekly only. Federal law does not require premium pay for a long single day, and it does not require any pay for unworked holidays or weekends.
• It does not reach exempt employees, and the exemption tests turn on facts an employee may not be able to verify.
• The salary threshold that separates exempt from non-exempt has moved repeatedly through litigation and rulemaking, so the current figure has to be checked rather than assumed.