It’s not enough for employers with nonexempt employees to simply know the federal overtime regulations. They must also know the overtime labor laws in the states where they employ people. If their employees are working in multiple states, compliance becomes increasingly difficult without the help of a payroll service provider.

Table of Contents

What is the federal overtime law?

The federal law governing overtime is the Fair Labor Standards Act (FLSA). It entitles nonexempt employees to overtime wages when they work more than 40 hours in a workweek. For this purpose, a workweek is seven consecutive 24-hour periods. The premium overtime pay rate is one and one-half times the regular pay rate, commonly called “time and a half.”

Overtime rules by state vs. federal overtime law

Some states have their own employment and overtime laws, while others follow the FLSA. When state and federal overtime laws differ, employers generally must follow the law most favorable to the employee.

For example, in California, employers must pay nonexempt employees one and one-half times their regular pay rate for all hours worked in excess of eight hours, up to and including 12 hours in any workday, and for the first eight hours worked on the seventh consecutive day of work in a workweek. Nonexempt employees are also entitled to double their regular pay rate for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.

Forced overtime work

Employers generally may mandate overtime for their employees if they have a legitimate business reason for it and adhere to the following:

  • State or federal laws that limit the number of hours employees can safely work must not be violated.
  • Employees who have a disability or a sincerely held religious belief that would prevent them from working mandatory overtime must be reasonably accommodated.
  • Mandatory overtime policies must not conflict with collective bargaining agreements.

Aside from these exceptions, employees who refuse to work the extra hours can be disciplined and even terminated.

Occupations that are exempt from overtime pay

The following roles may be exempt from overtime payment if the appropriate job duties tests are met, and the employee earns the minimum salary necessary for exemption:

  • Administrative
  • Professional
  • Executive

Federal and state exemption criteria may differ. Employers should consult legal counsel to ensure employees are classified correctly. 

State exemption criteria

Generally, employers must follow the state law if it is more favorable to employees than the federal law, i.e., it requires a higher salary level or has duties tests that are more difficult to satisfy. Only a few states have minimum salary requirements for exemption that exceed the proposed changes to the FLSA, but more could join the list in the future. Some states also prohibit employers from using bonuses to satisfy part of the minimum salary requirement.

Refer to ADP’s FLSA & Overtime Rule Guide for proposed changes to FLSA exemption and the latest salary level requirements.

Overtime pay rate by state

Most states entitle nonexempt workers to premium pay after working more than 40 hours per workweek. Other states have different rules. Refer to the Department of Labor for state-specific guidance

Frequently asked questions about state overtime laws

Which states have daily overtime laws?

States with daily overtime include Alaska, California, Colorado and Nevada. Generally, if employees in these states work more than a certain number of hours per day, they may be entitled to overtime pay. Employers should check their state law for the latest information.

What is overtime abuse?

Overtime abuse occurs when nonexempt employees work overtime hours without their employer’s authorization so they can earn more money. This practice is costly, but it can be reduced with time and attendance software that allows employers to track their employees’ hours more accurately.

How much am I required to pay for overtime work?

The FLSA requires employers to pay nonexempt employees one and one-half times their regular pay rate when they work more than 40 hours in a workweek. State overtime laws may differ. Employers should review applicable state law and consult legal counsel to help ensure they compensate employees using the correct overtime rates.

Is not paying overtime work illegal?

Yes. Under both federal and state law, employers who fail or refuse to pay nonexempt employees the required overtime premium are subject to civil and criminal penalties.

This guide is intended to be used as a starting point in analyzing state overtime laws and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax guidance or other professional services. Please consult with your legal counsel.