Overtime Rules Comparison: Federal, State & Employee Differences

Updated On: August 23, 2025 by     Aaron Connolly  

Overtime Rules Comparison: Key Concepts and Importance

Overtime rules can get pretty tangled, especially when you look at the differences between federal and state levels. Employers really have to pay attention to stay out of trouble, and workers need to know what they’re entitled to.

Understanding these differences isn’t just about the law—it’s about keeping everyone on the same page and avoiding headaches down the road.

How Overtime Rules Affect Employees and Employers

The Fair Labor Standards Act (FLSA) lays down the basic rules for overtime in the U.S. Federal law says employers have to pay nonexempt workers time and a half for hours worked over 40 in a week.

For employees, overtime rules mean:

• You’re protected from being overworked without proper pay.
• You know when you’ll get extra pay.
• If your boss breaks the rules, you’ve got legal options.

Some states go further than federal law. For example, a few states require overtime after eight hours in a day. In certain cases, states even require double-time pay.

Employers deal with a lot when it comes to overtime rules. They have to figure out which laws apply to each employee, especially if their business operates in more than one state.

Multi-state companies often run into conflicting overtime regulations. It’s not exactly a walk in the park.

The U.S. Department of Labor handles federal overtime enforcement. State labor departments take care of local overtime law violations.

Why Understanding Overtime Differences Matters

Legal compliance is probably the biggest reason to get these rules right. Messing up can mean back pay, penalties, or lawsuits. The Department of Labor has clawed back over £200 million in back wages for workers in recent years.

Financial planning is a lot smoother when companies know their overtime obligations. They can budget for labor costs and avoid nasty surprises.

Employee relations get a boost when everyone understands their rights. Good communication helps prevent disputes and builds a bit of trust.

Competitive advantage? Sure, companies that manage overtime well can pay better and still turn a profit.

Some industries have their own overtime headaches. Healthcare workers, for example, have special rules. Construction companies see state requirements change from one job site to the next.

Federal Overtime Laws: The Fair Labour Standards Act (FLSA)

The Fair Labour Standards Act sets the main framework for overtime pay in the U.S. Employers have to pay time-and-a-half for hours worked over 40 in a workweek. The U.S. Department of Labor’s Wage and Hour Division enforces this.

FLSA Coverage Criteria and Scope

The FLSA covers most private and public employers in the U.S. It applies to employees working for businesses involved in interstate commerce or producing goods for it.

Key Coverage Requirements:

• Businesses with annual gross sales of £370,000 or more
• Hospitals and care facilities, no matter their size
• Schools and government agencies
• Domestic workers in private homes

The Act also covers employees whose work touches interstate commerce. That could mean handling out-of-state goods, making interstate phone calls, or using the mail for business.

Standard Overtime Rules:

• 40-hour threshold: Overtime starts after 40 hours in a workweek
• Time-and-a-half rate: At least 1.5 times your regular hourly pay
• No daily overtime: Federal law doesn’t require overtime for working more than 8 hours in a day

Some employees don’t qualify for overtime. These are the so-called exempt workers—executives, administrators, professionals, some computer specialists, and certain domestic workers. They have to meet specific salary and duty tests.

The Act treats each workweek as 168 straight hours. Employers can’t average hours across weeks to dodge overtime.

Wage and Hour Division Role in Enforcement

The Wage and Hour Division (WHD) at the U.S. Department of Labor enforces FLSA’s overtime rules. You’ll see them investigating complaints, checking records, and making sure businesses follow the law.

Primary Enforcement Functions:

• Looking into employee complaints about unpaid overtime
• Auditing employer records for compliance
• Getting back wages for workers who missed out
• Handing out penalties for willful violations

Employers have to keep detailed records of employee hours and pay. That means tracking total hours worked each day and week, regular pay rates, and overtime payments.

Investigation Process:

1. Complaint filing: Employees can file complaints online or by phone.
2. Record review: Investigators look over payroll and time records.
3. Back wage calculation: WHD figures out what’s owed.
4. Resolution: Employers have to pay up and may get hit with penalties.

Employers can’t punish workers for complaining or helping with investigations. The Division will go after companies that retaliate.

Violations can lead to civil penalties up to £1,500 per violation if it’s repeat or willful. The WHD sometimes even goes after criminal charges for repeated violations.

Who is Covered: Exempt vs Non-Exempt Employees

If you want to know who gets overtime pay, you need to figure out if someone is exempt or non-exempt under the FLSA. Exempt employees have to meet strict criteria on salary, how they’re paid, and their actual job duties.

Defining Exempt Employees and Duties Test

Exempt employees don’t get overtime pay, no matter how many hours they work. To qualify as exempt, they have to pass three tests.

The duties test checks what the employee actually does—not just their job title. Their work has to fit into categories that need advanced skills or serious responsibility.

Executive exemption: Managers who regularly supervise two or more employees and have hiring, firing, or promotion authority.

Administrative exemption: Workers whose jobs are tied to business operations or management, and who make important decisions on their own.

Professional exemption: This covers:

• Learned professionals: Jobs that require advanced knowledge from long study
• Creative professionals: Work that calls for imagination or artistic skill

There are other exempt categories, like computer professionals earning at least £684 per week and outside sales employees who mostly work away from the office.

All exempt employees need to make at least £35,568 a year and get a fixed salary that doesn’t change based on hours worked.

Non-Exempt Employee Protections

Non-exempt employees get all the wage and hour protections under federal law. These workers have to track their hours and get overtime pay—1.5 times their regular rate—for anything over 40 hours in a week.

Overtime eligibility covers most hourly workers and a lot of salaried employees who don’t meet the exempt requirements. Think factory workers, retail staff, customer service reps, and some supervisors.

Non-exempt workers must get at least the federal minimum wage of £7.25 per hour. They can be paid hourly, by salary, or other ways, as long as they meet the minimum wage.

Category	Exempt Employee	Non-Exempt Employee
Overtime pay	Not eligible	1.5x rate after 40 hours
Minimum salary	£684 per week	£7.25 per hour
Hour tracking	Not required	Must track all hours
Payment method	Fixed salary	Hourly, salary, or wage

Employers really need to classify jobs correctly. If they mess up, they risk big penalties and having to pay back wages.

Overtime Pay Calculations and Requirements

Getting overtime pay right means knowing how to figure out regular and overtime rates, and who actually qualifies based on salary thresholds. These numbers decide if someone gets time-and-a-half for hours over 40 in a week.

Overtime Rate and Regular Rate of Pay Explained

The overtime rate is 1.5 times your regular hourly rate for all hours over 40 in a workweek. So if you make £15 per hour, your overtime rate jumps to £22.50 per hour.

Your regular rate of pay isn’t just your base wage. It also includes:

• Base hourly wage or salary
• Non-discretionary bonuses
• Commissions
• Piece-rate pay
• Shift differentials

If you’re salaried, you figure out your regular rate by dividing your weekly salary by the hours you worked. For example, if you earn £600 for a 45-hour week, your regular rate is £13.33 per hour (£600 ÷ 45). For the 5 overtime hours, you’d get an extra £33.33 (5 × £6.67).

If you work multiple jobs in a week, use a weighted average. Add up your earnings from all jobs and divide by total hours to get your regular rate for overtime.

Salary Thresholds and Highly Compensated Employees

Salary thresholds decide who gets overtime under federal law. In 2024, if you make less than £684 per week (£35,568 per year), you must get overtime no matter your job duties.

Highly compensated employees making over £107,432 a year might be exempt if they do at least one executive, administrative, or professional duty. This only affects a small group of workers.

The salary has to be on a “salary basis,” which means:

• You get a fixed weekly amount, no matter how many hours you work
• Employers can’t cut your pay for partial days off
• You have to meet the minimum threshold every week

Some states set higher salary thresholds than federal law. For example, California and New York require overtime pay for higher earners than federal rules do.

Employers can’t average hours across weeks to get around overtime. Each 7-day workweek stands alone for calculating overtime.

Defining the Workweek and Overtime Triggers

The workweek is the backbone of all overtime calculations under federal law. It’s a fixed seven-day period that decides when overtime pay starts.

How employers set up workweeks—fixed or flexible—directly affects when employees get overtime.

The Workweek Standard in the FLSA

The FLSA calls a workweek any seven straight 24-hour periods, totaling 168 hours. This forms the basis of federal overtime law for interstate commerce.

Employers can start the workweek on any day they want. Maybe it’s Monday at midnight, or Wednesday at 6 AM. Once they pick, it has to stay the same.

Key workweek requirements:

• Seven consecutive days
• Same starting day and time each week
• Employers can’t change it to dodge overtime
• Applies to all non-exempt employees

Once an employee works over 40 hours in a workweek, overtime pay kicks in. That’s the rule.

This setup is different from bi-weekly pay periods. If you work 35 hours one week and 45 the next, you still get overtime for the five hours over 40 in that second week.

Impact of Flexible and Fixed Work Schedules

Different work setups change how we figure out overtime under the standard workweek system.

Fixed schedules usually follow set hours, while flexible ones can make overtime calculations a bit trickier.

Fixed schedule employees work the same hours every week.

If they go over 40 hours, they get premium pay—simple as that.

Flexible schedule employees might work a ton one week and not as much the next.

With the fluctuating workweek method, employers pay a fixed salary for all hours, then add half-time pay for any overtime.

This method only works if:

• The employee agrees the salary covers all hours
• Hours actually go up and down each week
• Employers add half-time pay for hours over 40

No matter the arrangement, everyone has to follow the same basic overtime rules.

The workweek always sets the period for measuring overtime, making sure employees get paid for those long hours.

State Overtime Laws: Major Differences from Federal Rules

Some states pay overtime after just 8 hours in a day, and a few even offer double overtime for extra-long shifts.

California, honestly, leads the pack with the most worker-friendly overtime laws.

States With Daily Overtime Rules

Most states only require overtime after 40 hours in a week.

A handful, though, have daily overtime that starts much sooner.

California has the strictest daily rules in the country.

Workers get time-and-a-half for any hours over 8 in a day, even if they don’t hit 40 hours for the week.

Alaska pays overtime for hours worked past 8 in a day, and this stacks on top of the weekly 40-hour rule.

Nevada gives daily overtime if you work more than 8 hours in a day, but only if you earn less than one and a half times the minimum wage.

These daily rules let workers earn overtime pay much faster than the federal law.

States With Double Overtime Rules

California stands alone for double overtime pay.

Employees there get double pay in two situations that go beyond the standard rules.

If you work more than 12 hours in a day, you earn double your regular rate for those extra hours.

You also get double pay for any hours over 8 on your seventh day in a row.

So, let’s say someone works 14 hours on a Tuesday—they get regular pay for the first 8, time-and-a-half for hours 9 to 12, and double pay for hours 13 and 14.

No other state offers these double-time protections.

State-by-State Overtime Rules Comparison

Most states stick to federal overtime law, but some have stricter rules that protect workers better.

A few require overtime after just 8 hours in a day, and some have special rules for certain industries.

States that Default to Federal Overtime Law

Many states just follow the federal standard.

Employers there pay time-and-a-half after 40 hours in a workweek.

States following only federal overtime law:

• Arkansas, Connecticut, Illinois, Indiana, Kentucky
• Maine, Maryland, Massachusetts, Michigan, Missouri
• Montana, New Hampshire, New Jersey, New Mexico
• New York, North Carolina, North Dakota, Ohio
• Pennsylvania, Rhode Island, Vermont, Washington
• West Virginia, Wisconsin

These states don’t have daily overtime rules.

You need to work more than 40 hours in a week to get overtime.

The federal law covers most employees and says overtime is 1.5 times your regular hourly rate.

States with Unique Overtime Provisions

Some states go further with daily overtime or industry-specific rules.

California has the toughest laws—time-and-a-half after 8 hours in a day or 40 in a week, and double pay after 12 hours in a day or after 8 hours on the seventh straight day.

Alaska pays overtime after 8 hours per day or 40 per week.

Colorado requires overtime after 12 consecutive hours, 12 hours in a day, or 40 per week.

Nevada gives daily overtime if you earn less than 1.5 times minimum wage and work over 8 hours in 24 hours.

Oregon makes mills, factories, and manufacturing plants pay overtime after 10 hours a day, and some timber workers get it after 8.

Compensatory Time Versus Overtime Compensation

Comp time lets employers give time off instead of overtime pay, but the law puts tight limits on when that’s allowed.

Private sector workers almost never get comp time under federal law, but government workers have more options in some situations.

Legality and Use of Comp Time

Comp time is mostly illegal for private-sector, non-exempt employees under the Fair Labour Standards Act (FLSA).

If you work more than 40 hours a week at a private company, you must get overtime pay at 1.5 times your regular rate.

You can’t just make a deal with your boss to take time off instead of overtime pay.

The law requires immediate overtime pay to protect workers.

A few states allow rare exceptions for private employers, but these are unusual and come with strict rules.

Exempt employees are a different story.

Since they don’t qualify for overtime under the FLSA, employers can give them comp time if they want.

Penalties for illegal comp time can be huge.

Employers can get fined up to £10,000 for willful violations, and workers can recover unpaid wages plus an equal amount in damages.

Compensatory Time for Public Sector Employees

Government agencies can give comp time instead of overtime pay, but only if both sides agree before the extra work starts.

Public sector comp time works differently for exempt and non-exempt workers.

Non-exempt government employees get 1.5 hours of comp time for every overtime hour.

Time limits matter. Workers have to use their comp time within 26 pay periods of earning it.

If they don’t use it or switch jobs, they get paid overtime instead.

Agencies can’t force non-exempt employees to take comp time instead of overtime pay.

For exempt employees above certain pay thresholds, agencies might require comp time for unusual overtime.

Union agreements with government employers often set the comp time policies.

These deals have to follow federal labour standards but can offer some flexibility.

Back Wages, Liquidated Damages, and Unpaid Wages

If employers don’t pay the right overtime, workers can go after what they’re owed—and sometimes get extra penalties on top.

The Fair Labor Standards Act (FLSA) spells out how these payments work and what can happen to employers who break the rules.

How Back Wages Are Recovered

Back wages are just unpaid wages and overtime that employers owe.

Federal law lets us recover them in a couple of ways.

Administrative Settlements The Department of Labour’s Wage and Hour Division investigates wage violations.

Since June 2025, they only handle payment of unpaid wages during settlements—they don’t tack on liquidated damages unless a lawsuit gets filed.

This shift lowers the financial risk for employers during investigations.

Workers still get their unpaid wages, but not the automatic double damages at this stage.

Court Proceedings If it goes to court, workers can recover both back wages and liquidated damages.

Liquidated damages match the unpaid wages, so you could get double what you’re owed.

Private lawsuits let you seek:

• All back wages
• The same amount again in liquidated damages
• Legal fees and court costs

Consequences for Overtime Violations

Employers who break overtime rules can wind up with serious financial penalties.

The exact consequences depend on whether things get settled administratively or go to court.

Financial Penalties Here’s what the FLSA says for wage violations:

Violation Type	Maximum Penalty
Willful/repeated minimum wage violations	£1,000 per violation
Child labour law violations	£10,000 per violation
Liquidated damages (in court)	Equal to unpaid wages

Administrative vs Court Action During investigations, employers only have to pay what they owe.

But the Department of Labour can still fine them for willful or repeat violations.

Court cases are riskier.

Workers can get liquidated damages—so their award doubles.

Employers might also have to pay the worker’s legal fees and court costs.

Even small amounts of unpaid wages can turn into expensive lawsuits.

Workers keep all recovered wages since employers usually pay the legal bills.

Compliance Tips for Employers and Employees

Following overtime rules protects everyone—workers and businesses—from expensive legal headaches.

Staying up to date on changing laws and keeping good records helps avoid trouble.

Staying Updated With Overtime Regulations

We have to track changes at both federal and state levels since rules can differ a lot.

The Department of Labor updates federal rules often, and states sometimes go even further.

Federal updates come through the DOL’s website and email alerts.

Sign up for their notifications if you want to stay ahead.

State rules matter more if they’re more generous.

California, for example, requires overtime after 8 hours a day.

Remote work adds another layer—what matters is where the employee actually works.

Best ways to keep up:

• Get Department of Labor alerts
• Check your state’s labour website every month
• Read local employment bulletins
• Join employer groups for news

Setting calendar reminders for quarterly reviews is a good idea.

You’ll catch changes before they mess up your payroll.

Practical Steps for Avoiding Issues

Keep records of all hours and pay.

Most overtime violations happen because of bad documentation.

For employers:

• Use time-tracking tools that log every hour
• Train managers on how overtime gets approved
• Review employee classifications every year with a lawyer
• Don’t make payroll deductions that could change exempt status

Job descriptions have to match real work. Courts look at what people actually do, not just their job titles.

Mistakes to watch out for:

• Calling someone a manager when they’re not
• Forgetting to count bonuses in overtime
• Mixing up workweeks and pay periods
• Assuming remote workers follow the home office’s state laws

Monthly payroll audits help catch errors.

Make sure overtime pay includes all required amounts like shift premiums and non-discretionary bonuses.

Write clear policies for overtime approval and time tracking.

Share them with everyone so there’s no confusion.

Common Overtime Scenarios and Examples

Overtime rules can look totally different for salaried and hourly workers.

Some industries add even more complications.

Knowing these differences helps everyone stay compliant and ensures fair pay for all.

Overtime for Salaried Employees

A lot of folks think salaried employees never get overtime. That’s not always the case.

Overtime eligibility for salaried workers really depends on their job duties and how much they earn. The Fair Labour Standards Act lays out the criteria for who’s exempt and who isn’t.

Non-exempt salaried employees get overtime if they work more than 40 hours a week. Here’s how you figure out their overtime pay:

• Annual salary: £41,600
• Weekly salary: £41,600 ÷ 52 = £800
• Regular hourly rate: £800 ÷ 40 = £20/hour

Let’s say someone works 48 hours in a week:

• Regular pay: £800 (that’s their fixed weekly salary)
• Overtime hours: 8 hours
• Overtime rate: £20 × 1.5 = £30/hour
• Overtime pay: 8 × £30 = £240
• Total weekly pay: £1,040

Exempt employees—like executives, administrators, and professionals who earn above certain thresholds—don’t get overtime, no matter how many hours they work.

You’ll find department managers, software engineers, and accountants often fall into the exempt category as long as they meet both salary and duty requirements.

Sector-Specific Overtime Practices

Overtime doesn’t look the same everywhere. Different industries tweak the rules to fit their own needs and regulations.

Manufacturing and warehousing often use shift differentials and overtime together. Workers might get the usual 1.5x pay for hours over 40, plus extra for night or weekend shifts.

Healthcare has its own twists. Nurses working 12-hour shifts sometimes get daily overtime after 8 hours, depending on the region—that’s separate from weekly overtime.

Construction workers usually see more overtime during the summer. Winter, on the other hand, tends to slow things down with fewer extra hours.

Retail and hospitality often try to juggle part-time schedules to avoid overtime costs. But if someone works several positions at the same company, you have to combine their hours for overtime eligibility.

Transportation sticks to federal rules that require overtime after certain duty periods, not just after 40 hours. These rules focus more on consecutive driving time.

Every sector tries to balance operational demands with fair pay, all while keeping up with federal and industry-specific regulations.

Recent Updates and Ongoing Legal Challenges

The Department of Labor’s 2024 overtime rule has run into a wall of legal challenges. Courts have blocked key parts, and employers are left trying to figure out what to do next. Several business groups have filed federal lawsuits to fight the new salary thresholds.

Changes in Salary Thresholds

The Department of Labor released its final overtime rule in April 2024. They set up a two-step process to raise salary thresholds, hoping to extend overtime protections to millions more workers.

Key threshold changes:

• First increase hit in 2024
• Second phase comes in 2025
• Automatic adjustments tied to wage data

But now, all of this feels up in the air because of ongoing legal challenges. The US Court of Appeals for the 5th Circuit hit pause on the case Texas and Plano Chamber of Commerce v DOL for 120 days, so things are on hold for now.

Business groups say the increases are too much, too fast, and will make life harder for employers. The Eastern District of Texas has become ground zero for these fights, with industry organisations filing complaints about the new thresholds.

Notable Court Decisions Impacting Overtime

A handful of important court actions have shaped where things stand. The 5th Circuit’s decision to pause proceedings has left both employers and workers in limbo.

Recent legal developments:

• May 2024: Business groups challenged the rule in Texas federal court
• Several industry organisations joined as plaintiffs
• Courts questioned whether the Department of Labor can make such sweeping changes

The heart of the legal fight is whether the Department of Labor went too far. Businesses argue the threshold increases are just too steep and not backed up by economic data.

These court fights make it tough for employers to know what to do. Many are still getting ready to implement the rule, just in case the courts let it stand.

Frequently Asked Questions

Workers get confused all the time about how overtime rules actually apply—especially when it comes to part-time versus full-time status or how holiday pay fits in. The 40-hour threshold and time-and-a-half pay are the basics, but exceptions and industry quirks make things more complicated than they probably should be.

What are the main differences in overtime compensation between part-time and full-time employees?

Part-time and full-time employees both follow the same federal overtime rules. If you work over 40 hours in a week, you earn overtime at 1.5 times your regular rate.

Your status—part-time or full-time—doesn’t change when overtime kicks in. For example, if a part-timer usually works 30 hours but puts in 45 one week, they get overtime for those 5 extra hours.

The main difference is simply how likely you are to hit that 40-hour mark. Full-timers usually get there faster just by working their regular shifts.

How do overtime pay rules vary for salaried versus hourly employees?

A lot of salaried employees still qualify for overtime, even though they get a fixed weekly pay. The real question is whether you’re exempt or non-exempt under the Fair Labour Standards Act.

Non-exempt salaried folks get overtime for hours over 40. You figure out their regular rate by dividing their weekly salary by the actual hours worked.

Let’s say you make £405 a week and work 45 hours. Your regular rate is £9 per hour, so for those 5 overtime hours, you get an extra £22.50 (half your regular rate).

Exempt employees—usually executives, professionals, or admin staff—have to meet specific duty and salary criteria.

Could you explain how overtime hours are calculated in different work sectors?

Most industries stick to the standard rule: time-and-a-half pay for hours over 40 in a week. But a few have their own twists.

Healthcare sometimes uses different calculation periods. Some places average hours over longer stretches if workers agree.

Government employees might get overtime after 8 hours in a day or 40 in a week, depending on where they work.

Construction and manufacturing usually keep it simple and follow the standard rules. Transportation workers answer to Department of Transportation guidelines, which can be different.

Are there any exceptions to the standard overtime regulations that I should be aware of?

There are quite a few exceptions out there. Farm workers, seasonal staff, and some retail employees might have different rules.

Computer professionals who make enough money often count as exempt. Outside sales reps usually don’t get overtime, no matter how many hours they put in.

Some small businesses—those making less than £500,000 a year—might not have to follow federal overtime rules. But if you’re involved in interstate commerce, you still qualify.

Heads up: Employers can’t get around overtime by making you sign something. If you work more than 40 hours, you’re owed overtime, even if your boss didn’t approve the extra time.

What is the maximum number of overtime hours one is legally allowed to work?

Federal law doesn’t set a cap on overtime hours for workers aged 16 and up. Your boss can require as much overtime as the business needs.

Some states have daily overtime rules after 8 hours or limit mandatory overtime in certain industries, like healthcare.

Union contracts usually do a better job of setting overtime limits or require extra pay for really long hours.

Honestly, your safety is the real limit. Too much overtime can lead to burnout or even injuries on the job.

How do holiday periods affect overtime pay and rules?

Working on holidays doesn’t mean you’ll automatically get overtime pay under federal law. You only rack up overtime if your hours go over 40 in that workweek.

Holiday pay is just extra compensation on top of your usual wages. When you calculate overtime, this bonus doesn’t count toward your regular rate.

Let’s say you put in 8 hours on Christmas Day, then work 36 more hours that week. You still won’t qualify for overtime, since you only hit 44 hours total for that week.

A lot of employers throw in holiday premium pay as a perk. Sometimes it’s double time, sometimes time-and-a-half, but it’s always separate from how they figure out overtime.