FAQs About Overtime Pay for Nonexempt Employees

Federal and State Laws Require Employers to Pay Overtime to Nonexempt Employees

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OverviewOvertime pay is the compensation paid to an employee for hours worked more than 40 hours in a single work week. Federal and state laws require overtime pay for nonexempt employees, and in some cases, even salaried employees.

What is Overtime Pay?

Overtime pay is the compensation paid to an employee for hours worked more than 40 hours in a single work week.

What Defines a “Workweek?”

A “work week” is not necessarily Monday through Friday, but is any consecutive seven-day (24 hour) period of time, or 168 consecutive hours (7 x 24 Hours = 168 Hours).

An employer may have different “work weeks” for different employees and employees work weeks may also be subject to change.  An employer who manipulates their work weeks by purposely adjusting start days to avoid paying overtime may be breaking the law.

Some states have additional laws regarding when overtime pay must be given that are even stronger than federal law.  For example, in California employers must pay overtime at time and a half to employees who work more than 8 hours in a single day and double-time after 12 hours worked in a single day.  While in Colorado, employees get overtime pay at a rate of 1.5 after 12 hours are worked in a given day.

How Overtime Pay is Calculated

Do State Laws Require Overtime Pay?

Yes, always. States cannot adopt laws that do not at least meet the federal law minimum overtime pay standards, but they can enact laws the offer exceed them. For example, some state laws require overtime pay to be paid when an employee works more than eight hours in a single day and some state laws for overtime pay are more generous to employees than are federal laws.

Who is Eligible to Receive Overtime Pay?

All nonexempt workers are eligible to receive overtime pay, and, in some cases, this includes salaried employees that may also be considered nonexempt.

Are All Hourly Wage Workers Nonexempt Employees?

No.

It is important to understand that “nonexempt” does not necessarily include all hourly wage earners. An employee is determined to either be nonexempt (eligible) or exempt (not eligible) for overtime pay based on a variety of factors.

Do I have to Pay Salaried Workers Overtime Pay?

Generally, no, but in some cases you may be required to pay overtime to salaried employees (nonexempt salaried employees are usually defined as those working in certain industries, performing certain tasks, and who make a salary under a certain threshold). In some cases, an employer may pay a “salary” for nonexempt positions to simplify payroll. However, the employer must still pay the salaried, nonexempt worker for any overtime hours that they work.

Overtime pay laws only apply to “nonexempt” which are usually, but not always, hourly wage workers.

How Much is the Overtime Hourly Pay Rate?

Federal law stipulates nonexempt employees eligible for overtime pay be compensated for overtime hours at a rate of one and one-half (1.5) times their regular rate of pay.

For example, an hourly employee regularly paid $10.00 per hour would earn $15.00 per hour for each overtime hour:

Regular Hourly Rate x 1.5 = Hourly Overtime Pay Rate

Do I have to Pay Employees Overtime Based on Hours Worked?

Yes. However, employers may pay some employees by piecework or annual salary (in which case any expected overtime hours are “built in” to the compensation package). But in each case, overtime pay for all nonexempt employees must still be calculated based on the hours eligible employees work per workweek.

When Do Employees Get Paid for Overtime Hours Worked?

Overtime pay must be paid at the same time an employee is paid for regular hours worked in the same 7-day (24 consecutive hours) work week. In other words, an employer cannot hold back on overtime pay – it must be kept current and paid on the same cycle for regular payroll.