Overtime Laws in Alabama 2026: Pay Rates, Exemptions & Tax Deduction (2026)
⚠️Informational only — not legal or tax advice.
Guide for Alabama overtime laws 2026
Last verified: March 2, 2026
Next scheduled review: June 2, 2026
Table of Contents
- Alabama Overtime Laws at a Glance (2026)
- Does Alabama Have Its Own Overtime Law?
- How Overtime Pay Is Calculated in Alabama
- Who Is Exempt from Overtime in Alabama?
- Federal Overtime Tax Deduction: “No Tax on Overtime” (2025–2028)
- Can an Employer Require Overtime in Alabama?
- Industry-Specific Overtime Rules in Alabama
- How to File an Overtime Wage Complaint in Alabama
- Penalties for Overtime Violations in Alabama
- Alabama Overtime Law Updates (2025–2026)
- Frequently Asked Questions
- Sources and Verification
Alabama Overtime Laws at a Glance (2026)
| Alabama Overtime Laws — Key Details (2026) | |
|---|---|
| Details | |
| Overtime threshold | 40 hours per workweek |
| Overtime pay rate | 1.5× regular rate of pay |
| Double time | No — not required under federal or Alabama law |
| 7th consecutive day rule | No |
| State minimum wage (2026) | No state minimum wage — federal rate of $7.25/hour applies |
| Exempt salary threshold (2026) | Federal: $684/week ($35,568/year) |
| Daily overtime | No — weekly calculation only |
| State enforcement agency | Alabama Department of Workforce — refers wage/hour matters to federal WHD |
| Federal enforcement | U.S. DOL Wage and Hour Division |
| Overtime tax deduction (federal) | Up to $12,500/year (2025–2028) — FLSA-covered workers |
| Statute of limitations | 2 years FLSA (3 years if willful) |
Governing law: Fair Labor Standards Act, 29 U.S.C. § 207 Last verified: March 2, 2026
Does Alabama Have Its Own Overtime Law?
Alabama does not have a separate state overtime statute. Overtime in Alabama is governed entirely by the federal Fair Labor Standards Act (FLSA).
According to the Alabama Department of Workforce (formerly the Alabama Department of Labor), Alabama does not have any state laws governing wage and hour issues. Employers in Alabama must follow the federal guidelines set forth by the U.S. Department of Labor’s Wage and Hour Division.
Under the FLSA, nonexempt employees must receive overtime pay at 1.5 times their regular rate of pay for all hours worked over 40 in a workweek.
Federal statute: Fair Labor Standards Act, 29 U.S.C. § 207 U.S. DOL Overtime Page: https://www.dol.gov/agencies/whd/overtime Alabama Department of Workforce — Wage and Hour Information: https://labor.alabama.gov/Wage_and_Hour_Info.pdf
How Overtime Pay Is Calculated in Alabama
What Is a “Workweek”?
Under the FLSA, a workweek is a fixed, regularly recurring period of 168 consecutive hours (seven consecutive 24-hour periods). A workweek does not have to start on Monday or align with a calendar week — the employer may designate any day and time as the start of the workweek.
Each workweek stands alone. An employer cannot average hours across two or more workweeks to avoid overtime. If an employee works 50 hours in one week and 30 hours the next, overtime is owed for the first week regardless of the second.
Source: 29 C.F.R. § 778.104–778.105
Pay Rates
Under the FLSA, nonexempt employees in Alabama earn overtime at the following rate:
Time-and-a-half (1.5× regular rate):
- All hours worked over 40 in a workweek
Alabama does not require daily overtime or double-time pay. Working more than 8 hours in a single day does not trigger overtime unless total weekly hours exceed 40.
What Counts as the “Regular Rate of Pay”
The regular rate is not always the same as the hourly wage. Under the FLSA (29 C.F.R. § 778.108), the regular rate includes:
- Base hourly rate or salary equivalent
- Non-discretionary bonuses and incentive pay
- Shift differentials
- Commissions
- Piece-rate earnings
The regular rate does not include:
- Discretionary bonuses (e.g., holiday gifts)
- Employer contributions to benefit plans
- Vacation, holiday, or sick pay when no work is performed
Calculation Example
Alabama follows the federal minimum wage of $7.25/hour, as the state has not established its own minimum wage law.
Example — Weekly overtime in Alabama:
An employee earns $7.25/hour and works 48 hours in one workweek:
- Regular pay: 40 hours × $7.25 = $290.00
- Overtime pay: 8 hours × ($7.25 × 1.5) = 8 × $10.875 = $87.00
- Total weekly gross pay: $377.00
Source: 29 C.F.R. § 778.108–778.122; 29 U.S.C. § 207
For the current federal minimum wage applied in Alabama, see [Alabama Minimum Wage — RemoteLaws].
Who Is Exempt from Overtime in Alabama?
Not all employees in Alabama are entitled to overtime pay. Certain employees are classified as “exempt” under the FLSA.
Federal FLSA Exemption Requirements
To be exempt from overtime under the FLSA, an employee must meet all three of the following criteria:
1. Salary basis test: Paid a predetermined, fixed salary each pay period (not hourly)
2. Salary level test: Earn at least $684 per week ($35,568 per year)
3. Duties test: Perform specific job duties in one of these categories:
| Alabama Overtime Exemptions (EAP Categories) | |
|---|---|
| Exemption | Key duty requirement |
| Executive | Manages enterprise or department; directs 2+ employees; authority to hire/fire |
| Administrative | Office/non-manual work related to management or business operations; exercises independent judgment |
| Professional | Work requiring advanced knowledge in science or learning (prolonged specialized study) |
| Computer employee | Systems analysis, programming, software engineering — $684/week salary OR $27.63/hour |
| Outside sales | Primary duty is making sales away from employer's place of business |
Source: 29 C.F.R. Part 541
What Happened to the 2024 DOL Salary Threshold Increase?
In April 2024, the U.S. Department of Labor issued a final rule that would have raised the exempt salary threshold to $1,128 per week ($58,656/year) effective January 1, 2025.
On November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated that rule nationwide in Texas v. U.S. Department of Labor (No. 4:24-cv-00499).
The salary threshold remains $684/week ($35,568/year) as of 2026.
Because Alabama has no state-level exempt salary threshold, the federal standard is the only applicable threshold for employees in the state.
Source: 29 C.F.R. § 541.600; https://www.dol.gov/agencies/whd/overtime/rulemaking
Federal Overtime Tax Deduction: "No Tax on Overtime" (2025–2028)
The One Big Beautiful Bill Act (Public Law 119-21), signed on July 4, 2025, created a new federal income tax deduction for qualified overtime compensation under Internal Revenue Code § 225.
This deduction is available for tax years 2025 through 2028.
Who Is Eligible
- Nonexempt employees covered by the Fair Labor Standards Act (29 U.S.C. § 207)
- Must have a Social Security number valid for employment
- Cannot use the Married Filing Separately filing status
Who is NOT eligible:
- Exempt (salaried) employees who do not receive FLSA overtime
- Independent contractors (1099 workers) who are not FLSA-covered
- Employees receiving overtime only under employer policy or collective bargaining (if that overtime is not also required by the FLSA)
What Is Deductible
The deduction covers the premium portion of overtime pay — specifically the amount that exceeds the regular rate of pay.
| Overtime Premium — Deductible Portion Example ($30/hr Regular Rate) | ||
|---|---|---|
| Overtime type | What is deductible | Example ($30/hr regular rate) |
| Time-and-a-half (1.5×) | The "half" — 1/3 of total OT pay | $15/hr per OT hour ($45 − $30) |
IRS shortcut for 2025: If you only know your total overtime pay and were paid time-and-a-half, divide the total overtime amount by 3. Source: IRS Notice 2025-69
| Overtime Tax Deduction Limits (2026) | ||
|---|---|---|
| Filing status | Maximum annual deduction | Phase-out begins |
| Single | $12,500 | $150,000 MAGI |
| Married filing jointly | $25,000 | $300,000 MAGI |
| W-2 Reporting — Qualified Overtime Compensation | |
|---|---|
| Tax year | Employer reporting requirement |
| 2025 | NOT required to separately report (transition year — IRS Notice 2025-62). May voluntarily report in W-2 Box 14 as "QUAL OT" or provide a separate statement. |
| 2026 and later | REQUIRED to separately report qualified overtime compensation. The IRS has published a draft W-2 form indicating Box 12, Code TT for this purpose (draft form, subject to finalization). |
If an employer did not separately report overtime for 2025, the IRS allows employees to use “any reasonable method” to calculate the deductible amount, including payroll records, pay stubs, or one-third of total overtime pay (for time-and-a-half workers).
What This Deduction Does NOT Do
- Does not exempt overtime from Social Security (6.2%) or Medicare (1.45%) taxes
- Does not apply to state income taxes — federal deduction only
- Does not change how much overtime pay an employee receives; it reduces federal taxable income when filing
- Does not apply to overtime paid solely under employer policy that exceeds FLSA requirements
Source: IRS FAQs on Qualified Overtime Compensation Deduction; IRS Notice 2025-69; IRS Notice 2025-62; IRC § 225; P.L. 119-21, § 70202 Official IRS page: https://www.irs.gov/newsroom/questions-and-answers-about-the-new-deduction-for-qualified-overtime-compensation
Alabama Income Tax and Overtime
Alabama imposes a state income tax at rates ranging from 2% to 5% on individual income. Overtime pay in Alabama is subject to Alabama state income tax at normal rates.
The federal overtime deduction (IRC § 225) applies to federal income tax only. It does not reduce Alabama state taxable income.
Important note on Alabama’s prior state overtime exemption: Alabama previously provided a state income tax exemption for overtime wages paid to full-time hourly employees under Act 2023-421 (effective January 1, 2023) as amended by Act 2024-437 (extended through June 30, 2025). That exemption ended on June 30, 2025. Overtime wages earned after June 30, 2025, are fully subject to Alabama state income tax.
Employers were required to report exempt overtime wages earned January 1–June 30, 2025, in Box 14 of the employee’s Form W-2 using “EX OT WAGES” as the indicator.
Source: Alabama Department of Revenue — Notice: Overtime Exemption Ends June 30, 2025 https://www.revenue.alabama.gov/notice-overtime-exemption-ends-june-30-2025/
| Alabama Income Tax Rates (2026) | |
|---|---|
| Taxable income (single/separate) | Rate |
| First $500 | 2% |
| Next $2,500 ($501–$3,000) | 4% |
| Over $3,000 | 5% |
Source: Alabama Department of Revenue — Individual Income Tax https://www.revenue.alabama.gov/faqs/what-is-alabamas-individual-income-tax-rate/
For full Alabama income tax details, see [Alabama Income Tax — RemoteLaws].
Can an Employer Require Overtime in Alabama?
Under the FLSA, there is no federal limit on the number of hours an employer can require an adult employee (age 16 and older) to work in a workweek, as long as the employee is properly compensated for all overtime hours at the applicable rate.
An employer may discipline or terminate an employee for refusing to work overtime, unless a specific law, employment contract, or collective bargaining agreement provides otherwise.
Alabama does not have additional mandatory overtime restrictions beyond the FLSA. Alabama is an at-will employment state, and employers may require overtime. At-will employees who refuse to work overtime may face disciplinary action, including termination.
Protections That Always Apply
Regardless of mandatory overtime policies, the following protections apply in Alabama:
- All overtime hours must be compensated at 1.5 times the regular rate of pay
- Employers cannot retaliate against employees who file wage complaints (29 U.S.C. § 215(a)(3))
- Disability accommodation requests under the ADA may limit overtime requirements
- Child labor laws restrict hours for employees under 18 (Alabama has its own Child Labor Division within the Alabama Department of Workforce)
Source: 29 U.S.C. § 207; https://www.dol.gov/agencies/whd/overtime
Industry-Specific Overtime Rules in Alabama
Alabama follows federal FLSA rules exclusively. The following federal industry-specific provisions apply in Alabama.
Healthcare (8-and-80 System)
Under 29 U.S.C. § 207(j), hospitals and residential care facilities may use a 14-day work period. Overtime is due after 8 hours per day or 80 hours in the 14-day period, whichever calculation results in more overtime pay for the employee. This arrangement requires a prior agreement between the employer and employee before the work is performed.
Retail and Commission Employees
Under 29 U.S.C. § 207(i), retail or service employees paid more than half their earnings in commissions may be exempt from overtime if their regular rate exceeds 1.5 times the applicable minimum wage.
Transportation (Motor Carrier Exemption)
Employees whose duties affect the safe operation of motor vehicles in interstate commerce may be exempt from FLSA overtime under the Motor Carrier Act exemption (49 U.S.C. § 31502). This exemption applies to drivers, driver’s helpers, loaders, and mechanics who are regulated by the U.S. Department of Transportation.
Agriculture
Under the FLSA, most agricultural workers are exempt from overtime requirements. Alabama has no additional state-level agricultural overtime protections.
Source: 29 U.S.C. § 213(b)(1); 29 U.S.C. § 207(j); 29 U.S.C. § 207(i)
Compensatory Time (“Comp Time”) Rules
Under the FLSA, private-sector employers cannot offer comp time in lieu of overtime pay. An employee who works overtime hours must be compensated at 1.5 times their regular rate in wages, not in time off.
Public-sector employers (state and local government in Alabama) may offer compensatory time off instead of overtime pay under 29 U.S.C. § 207(o), provided:
- The comp time accrues at 1.5 hours for each overtime hour worked
- A prior agreement exists between the employer and employee (or union)
- The cap is 240 hours of accrued comp time (or 480 hours for public safety, emergency response, and seasonal employees)
- Employees must be permitted to use accrued comp time within a reasonable period
Alabama follows federal rules for compensatory time with no additional state provisions.
Source: 29 U.S.C. § 207(o)
How to File an Overtime Wage Complaint in Alabama
Because Alabama does not have its own wage and hour laws, the Alabama Department of Workforce does not investigate overtime complaints. Employees are directed to the U.S. Department of Labor’s Wage and Hour Division (WHD) for overtime wage claims.
Option 1: U.S. Department of Labor — Wage and Hour Division (Primary Option)
| How to File an Overtime Wage Complaint in Alabama | |
|---|---|
| Item | Details |
| Online filing | https://www.dol.gov/agencies/whd/contact/complaints |
| Phone (toll-free) | 1-866-487-9243 (1-866-4-US-WAGE) |
| Birmingham District Office | 950 22nd Street North, Suite 605, Birmingham, AL 35203 — (205) 536-8570 |
| Mobile Area Office | 1141 Montlimar Drive, Suite 1008, Mobile, AL 36609 — (251) 441-5311 |
| Montgomery Area Office | 4001 Carmichael Road, Suite 215, Montgomery, AL 36106 — (334) 223-7450 |
| Deadline | 2 years from violation (3 years if willful) |
Option 2: Alabama Department of Workforce
The Alabama Department of Workforce handles limited wage matters under state law (payment of wages already owed). For overtime violations specifically, the department refers employees to the U.S. DOL Wage and Hour Division.
| Alabama Department of Labor — Contact Information | |
|---|---|
| Item | Details |
| Website | https://adol.alabama.gov/ |
| Phone | (334) 242-8990 |
Option 3: Private Lawsuit
Employees may file a lawsuit against their employer in federal or state court under 29 U.S.C. § 216(b). Remedies may include:
- Back wages owed
- Liquidated damages (an additional amount equal to the unpaid wages)
- Reasonable attorney’s fees and court costs
Retaliation Protection
Under the FLSA (29 U.S.C. § 215(a)(3)), employers cannot retaliate against employees for:
- Filing an overtime wage complaint
- Participating in an investigation
- Testifying in proceedings related to overtime violations
Source: 29 U.S.C. § 216(b); 29 U.S.C. § 215(a)(3); https://adol.alabama.gov/; https://www.dol.gov/agencies/whd/contact/complaints
Penalties for Overtime Violations in Alabama
| Federal FLSA Penalties | |
|---|---|
| Penalty type | Amount |
| Back wages | Full amount of unpaid overtime owed |
| Liquidated damages | Equal to unpaid wages (effectively doubles total recovery) |
| Civil monetary penalty | Up to $2,451 per violation (willful/repeated — adjusted annually by the DOL) |
| Criminal prosecution | Willful: fines up to $10,000; second offense: up to 6 months imprisonment |
Source: 29 U.S.C. § 216; https://www.dol.gov/agencies/whd/overtime
Alabama State Penalties
Alabama does not have a separate state overtime statute and therefore does not impose additional state-level penalties for overtime violations. All penalties for overtime violations in Alabama arise under the FLSA.
Alabama Overtime Law Updates (2025–2026)
Federal Changes Affecting Alabama
- July 4, 2025: One Big Beautiful Bill Act (P.L. 119-21) signed — created federal overtime tax deduction for tax years 2025–2028 under IRC § 225
- November 15, 2024: U.S. District Court for the Eastern District of Texas vacated the DOL’s 2024 salary threshold rule — the exempt salary threshold remains $684/week ($35,568/year)
Alabama-Specific Changes
- June 30, 2025: Alabama’s state income tax exemption for overtime wages ended. The exemption had applied to full-time hourly employees earning overtime under the FLSA from January 1, 2023 through June 30, 2025 (Act 2023-421 as amended by Act 2024-437). Overtime wages earned on or after July 1, 2025, are fully subject to Alabama state income tax. Employers were required to report any exempt overtime wages earned January 1–June 30, 2025, in Box 14 of the employee’s 2025 Form W-2 using “EX OT WAGES” as the indicator. Source: https://www.revenue.alabama.gov/notice-overtime-exemption-ends-june-30-2025/
- 2025: The Alabama Department of Labor rebranded as the Alabama Department of Workforce. The agency’s wage and hour function continues to refer matters to the U.S. DOL Wage and Hour Division.
Last reviewed: March 2, 2026 Next scheduled review: June 1, 2026
Frequently Asked Questions About Overtime in Alabama
Does Alabama have overtime laws?
Alabama does not have a separate state overtime statute. Overtime in Alabama is governed entirely by the federal Fair Labor Standards Act (FLSA), 29 U.S.C. § 207. Under the FLSA, nonexempt employees must receive overtime pay at 1.5 times their regular rate of pay for all hours worked over 40 in a workweek.
What is the overtime rate in Alabama in 2026?
The overtime rate in Alabama is 1.5 times the employee’s regular rate of pay. Based on the federal minimum wage of $7.25/hour that applies in Alabama, the minimum overtime rate is $10.875/hour. Alabama does not require double-time pay.
Does Alabama require daily overtime?
No. Overtime in Alabama is calculated on a weekly basis only. Working more than 8 hours in a single day does not trigger overtime unless total hours worked in the workweek exceed 40.
Is mandatory overtime legal in Alabama?
Yes, in most circumstances. Alabama is an at-will employment state, and the FLSA does not limit the number of hours an employer can require an adult employee to work, provided all overtime hours are compensated at the applicable 1.5× rate. Employees who refuse may face disciplinary action unless a contract or collective bargaining agreement provides otherwise.
Am I exempt from overtime in Alabama?
Exemption from overtime depends on both salary level and job duties. Under the FLSA, an employee must earn at least $684/week on a salary basis AND perform executive, administrative, professional, computer, or outside sales duties to qualify as exempt. Alabama has no state-level salary threshold — only the federal $684/week standard applies.
Can salaried employees get overtime in Alabama?
Yes. Being paid a salary does not automatically make an employee exempt from overtime. Salaried employees who earn less than $684/week, or who do not meet the applicable duties tests, are nonexempt and entitled to overtime pay for all hours worked over 40 in a workweek.
Is overtime taxed in Alabama?
Overtime pay is subject to both federal income tax and Alabama state income tax. As of July 1, 2025, Alabama’s prior state income tax exemption for overtime wages has ended. However, under the federal One Big Beautiful Bill Act (2025–2028), FLSA-covered nonexempt employees may deduct up to $12,500 ($25,000 if married filing jointly) of the premium portion of their overtime pay from federal taxable income. This deduction does not reduce Alabama state income tax.
How do I calculate the federal overtime tax deduction?
For time-and-a-half pay, the deductible amount equals one-third of total overtime pay received. For example, if you earned $9,000 in total overtime pay at time-and-a-half, the deductible qualified overtime compensation is $3,000. The IRS confirms this calculation method in Notice 2025-69.
What was Alabama’s state overtime tax exemption, and is it still in effect?
Alabama provided a state income tax exemption for overtime wages paid to full-time hourly employees under Act 2023-421 (as amended by Act 2024-437). The exemption covered overtime earned from January 1, 2023, through June 30, 2025. It ended on that date and has not been renewed. Overtime earned on or after July 1, 2025, is fully subject to Alabama state income tax. Source: https://www.revenue.alabama.gov/notice-overtime-exemption-ends-june-30-2025/
How do I file an overtime complaint in Alabama?
Because Alabama has no state overtime law, overtime complaints are filed directly with the U.S. Department of Labor Wage and Hour Division (WHD). File online at https://www.dol.gov/agencies/whd/contact/complaints or call 1-866-487-9243. Offices in Alabama are located in Birmingham (205-536-8570), Mobile (251-441-5311), and Montgomery (334-223-7450).
Can my employer fire me for refusing overtime in Alabama?
In most cases, yes. Alabama is an at-will employment state, and an employer may discipline or terminate an employee for refusing to work overtime, unless a contract or collective bargaining agreement specifies otherwise. However, employers cannot retaliate against employees who file wage complaints or participate in DOL investigations (29 U.S.C. § 215(a)(3)).
Can my employer give comp time instead of overtime pay in Alabama?
Under the FLSA, private-sector employers in Alabama cannot substitute compensatory time off for overtime pay. An employee who works more than 40 hours in a workweek must receive overtime wages at 1.5 times the regular rate. Public-sector employers (state and local government) may offer comp time at 1.5 hours per overtime hour, up to 240 hours accrued (480 hours for public safety and emergency response employees), under 29 U.S.C. § 207(o).
Does working on weekends or holidays count as overtime in Alabama?
No. Under the FLSA, working on weekends or holidays does not automatically constitute overtime. Overtime is determined solely by whether total hours worked in the workweek exceed 40, regardless of which days those hours occurred.
What happens if my employer doesn’t pay overtime in Alabama?
Employees may recover unpaid overtime wages plus liquidated damages in an equal amount, as well as attorney’s fees and court costs, under 29 U.S.C. § 216(b). Complaints may be filed with the U.S. DOL Wage and Hour Division at https://www.dol.gov/agencies/whd/contact/complaints or by calling 1-866-487-9243.
What is the statute of limitations for overtime claims in Alabama?
Under the FLSA, the statute of limitations is 2 years from the date of the violation (or 3 years if the violation is willful). Alabama has no separate state overtime law, so the FLSA deadline is the only applicable deadline.
Sources and Verification
Primary Sources
- U.S. Department of Labor, Wage and Hour Division — Overtime Pay https://www.dol.gov/agencies/whd/overtime
- Fair Labor Standards Act — 29 U.S.C. § 201–219 https://www.dol.gov/agencies/whd/flsa
- 29 C.F.R. Part 541 (Overtime Exemptions)
- 29 C.F.R. § 778.104–778.122 (Regular Rate; Workweek)
- Alabama Department of Workforce — Wage and Hour Information https://labor.alabama.gov/Wage_and_Hour_Info.pdf
- Alabama Department of Workforce https://adol.alabama.gov/
- Alabama Department of Revenue — Notice: Overtime Exemption Ends June 30, 2025 https://www.revenue.alabama.gov/notice-overtime-exemption-ends-june-30-2025/
- Alabama Department of Revenue — Overtime Pay Exemption (Amended — Act 2024-437) https://www.revenue.alabama.gov/individual-corporate/overtime-pay-exemption-amended/
- Alabama Department of Revenue — Individual Income Tax Rates https://www.revenue.alabama.gov/faqs/what-is-alabamas-individual-income-tax-rate/
- Internal Revenue Service — Questions and Answers About the New Deduction for Qualified Overtime Compensation https://www.irs.gov/newsroom/questions-and-answers-about-the-new-deduction-for-qualified-overtime-compensation
- IRS Notice 2025-69 (Individual Calculation Guidance for Overtime Deduction)
- IRS Notice 2025-62 (Employer Reporting Transition Relief for 2025)
- U.S. DOL Consolidated Minimum Wage Table (revised January 1, 2026) https://www.dol.gov/agencies/whd/mw-consolidated
- U.S. DOL Complaint Filing — Wage and Hour Division https://www.dol.gov/agencies/whd/contact/complaints