How is overtime calculated?

Overtime is calculated by multiplying overtime hours by 1.5 times the employee’s regular hourly rate. Under federal law, overtime hours are any hours worked over 40 in a workweek. In states with daily overtime rules (California, Alaska, Colorado, Nevada), overtime also applies to hours worked beyond the daily threshold (usually 8 or 12 hours per day).

What is the overtime rate?

The standard overtime rate is 1.5 times the regular hourly rate, commonly called “time and a half.” If you earn $20 per hour, your overtime rate is $30 per hour. In California, hours beyond 12 in a single day are paid at double-time (2× the regular rate).

Do all states have the same overtime rules?

No. While all states follow the federal FLSA minimum of 1.5× after 40 hours/week, some states have additional protections. California, Alaska, Colorado, and Nevada require daily overtime. California and Kentucky have 7th consecutive day overtime rules. Minnesota sets a state threshold at 48 hours. When state and federal rules differ, the rule most favorable to the employee applies.

Does overtime apply to salaried employees?

It depends on whether the employee is classified as exempt or nonexempt. Salaried employees who earn below the exempt salary threshold ($684/week federal, higher in some states) or who do not meet the duties test for executive, administrative, or professional exemptions are nonexempt and must receive overtime pay. Being salaried does not automatically make an employee exempt.

How is overtime calculated for salaried nonexempt employees?

For a salaried nonexempt employee, the regular hourly rate is determined by dividing the weekly salary by the total number of hours the salary is intended to cover (typically 40). Overtime is then calculated at 1.5× that hourly rate for hours over 40 in the workweek.

Is overtime pay taxed differently?

Overtime pay is subject to the same federal and state income tax rates as regular wages. It is not taxed at a higher rate, but earning overtime may increase total income enough to move into a higher tax bracket. For tax years 2025–2028, eligible workers may deduct up to $12,500 in qualifying FLSA overtime pay from federal taxable income under the new overtime tax deduction.

Can my employer refuse to pay overtime?

No. Under the FLSA, covered nonexempt employees must receive overtime pay for all hours worked over 40 in a workweek. Employers cannot waive this requirement through agreement, company policy, or comp time (except for certain government employees). Employees who are not paid required overtime can file a wage complaint with the U.S. Department of Labor or their state labor agency.

Does overtime apply to remote workers?

Yes. Overtime laws apply based on the state where the employee physically performs work, regardless of where the employer is located. A remote employee working from California is subject to California’s overtime rules, even if the employer is based in Texas.

What is the 7th consecutive day overtime rule?

In California, when an employee works all 7 days in a workweek, the hours on the 7th day are paid at 1.5× for the first 8 hours and 2× for hours beyond 8. Kentucky also requires 1.5× overtime for all hours worked on the 7th consecutive day. Federal law does not require 7th-day overtime.

How do I know if I am exempt or nonexempt?

To be exempt from overtime, you must be paid on a salary basis, earn above the applicable salary threshold, and perform duties that meet the executive, administrative, or professional exemptions test. If you are unsure, ask your employer’s HR department or consult an employment attorney.