Overtime Laws & Regulations

Instructor: Joseph Madison

Joseph received his Doctorate from UMUC in Management. He retired from the Army after 23 years of service, working in intelligence, behavioral health, and entertainment.

This lesson will describe what overtime is, and how it is regulated at the federal and state levels, as including differences in state and federal requirements.


The concept of overtime and pay requirements can be challenging. For example, if Sharon has a schedule where she does not work Sunday to Wednesday the first week, but works Thursday to Wednesday the following week, she is still eligible for overtime. This is because overtime is not hard wired to the classic idea of a week.

The Fair Labor Standards Act (FLSA) states that overtime must be paid to employees that have worked 168 hours consecutively or 7 days in a row. These days do not have to start at the beginning or end of the week. This is what is termed a workweek.

Overtime consists of being paid at least 1.5 times the regular pay for any work over 40 hours in a workweek. It can be paid out even if an employee has an annual salary and not an hourly rate, since this is how overtime would be calculated. It is also important to note that double time is not something regulated by FLSA, they do not require this higher overtime for holidays, this is specific to businesses. Once the overtime is earned, it can be paid on a different date, or with the regular paycheck, this is not specifically required by the law.

Certain types of job fields change the requirements of overtime, such as servers and bartenders that have two types of income, hourly and tips. These individuals still qualify for overtime, but it will be determined based on the hourly pay, not on tip averages.

Exempt Employees

There is an exception to this law; however, a business is not required to pay overtime to employees that are working weekends or holidays, though many businesses do. The only people not covered by overtime laws are exempt employees.

Exempt employees are not paid an hourly wage, instead they have an annual salary that is broken down into pay periods. This classification of employee has to be professionals, administrative, or executive. This means a manual laborer cannot be deemed exempt to keep a business from paying overtime. Exempt employees unless otherwise stated are not given overtime; however, this is countered by higher pay and different benefits like medical and designated vacation and sick days.

Other exemptions from overtime are:

  • People who work at sea or on the road
  • Farmers and seasonal workers
  • Interns
  • Babysitters
  • Commissioned employees
  • Individuals that work and live at their employer's home

This is not an all-inclusive list, and per the FLSA that can be times where even these exemptions could qualify for overtime, so it is important to reach out to the state to see what qualifies for a specific business.

Counting the Hours

Laws that Differ Federal to State

The laws for overtime compliance can and are different from federal levels to state. A business will have to make sure they follow all federal and state laws together. How this works is the law that covers or provides the most for the individual is the one that is followed. For example, the overtime law federally requires employees to be paid for anything over 40 hours.

If a state makes a law that employees must be paid overtime for anything over 32 hours, then that is the law that should be followed. There are currently states like Vermont, where the state law says that businesses like hotels and retail stores do not have to pay overtime; however, federal regulations still can supersede these regulations.

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