FLSA Overtime Pay Requirements: Regular Rate, Exemptions, Remedies

Under the Fair Labor Standards Act, most employees must be paid at least one and one-half times their regular rate of pay for every hour worked beyond 40 in a single workweek.¹ The federal overtime pay requirements under the FLSA turn on three things: whether you are covered, how the 40-hour workweek is measured, and whether an exemption applies to your job. Get those three right and the math is straightforward.

Who Is Covered

Federal overtime rules reach workers two ways. Enterprise coverage applies to any business with at least two employees and at least $500,000 in annual gross sales or business volume. Individual coverage applies even when the employer falls below that threshold, so long as your own duties involve interstate commerce. That includes regularly handling calls or emails across state lines, processing credit card transactions, or shipping goods to other states.² Between the two paths, most U.S. workers are covered.

The 40-Hour Workweek

Everything in FLSA overtime law revolves around the workweek: a fixed, recurring period of 168 hours, or seven consecutive 24-hour days.³ An employer can pick any day and any hour as the start, but once set, they cannot keep shifting it to avoid paying overtime.

A frequent misunderstanding: working on a Saturday, Sunday, or holiday does not automatically trigger overtime under federal law. What matters is only the total hours inside the 168-hour window. If you put in eight hours on a Saturday but your weekly total stays at or below 40, no federal overtime is owed.⁴ Any premium for weekends or holidays comes from a contract or company policy.

Employers also cannot average hours across two or more workweeks. If you work 50 hours one week and 30 the next, you are owed overtime for 10 hours in that first week. The lighter second week does not cancel it out.¹

The federal rule is time-and-a-half after 40 hours in a workweek. The FLSA does not require daily overtime. A few states impose overtime after eight hours in a day or set higher premiums, and where state and federal rules both apply, the employer must follow whichever pays you more.

What Counts as Hours Worked

Before you know whether you have crossed 40 hours, you need to know what the FLSA treats as work. It reaches beyond time at your desk or on a production line.

On-Call Time

Federal rules distinguish being “engaged to wait” from “waiting to be engaged.” A security guard sitting at a desk between rounds is engaged to wait, and the quiet stretches still count as work. A plumber who carries a pager at home and can mostly go about personal business is waiting to be engaged, which generally does not count.⁵ The more restrictions the employer places on your freedom while on call, the more likely the time is compensable.

Training and Meetings

Training sessions, lectures, and meetings count as work time unless all four of these are true: the session is outside your normal hours, attendance is truly voluntary, the content is not directly related to your job, and you do no other work during it.⁵ Most employer-sponsored training fails at least one, which means the hours must be counted.

Travel Time

Your normal commute is not compensable. But travel during the workday, such as driving between job sites or from one client to another, is work time.⁵ This matters most in construction, home health care, and other fields that move you through multiple locations in a day.

Calculating the Regular Rate and Overtime Pay

Your overtime premium is based on your “regular rate,” which is not always your base hourly wage. Federal law defines it as total compensation for the workweek divided by hours worked, with certain exclusions.⁶

Payments that get folded into the regular rate include non-discretionary bonuses (bonuses promised in advance or tied to productivity), shift differentials for nights or weekends, and sales commissions. Payments excluded include genuine gifts, truly discretionary year-end bonuses, reimbursements for work-related expenses, and employer contributions to retirement plans or health insurance.⁶

For salaried non-exempt workers, divide the weekly salary by the number of hours it is meant to cover (typically 40). For piece-rate workers, divide total weekly piece-rate earnings by total hours worked that week.⁶

Once you have the regular rate, multiply it by 1.5. That is your overtime rate for every hour past 40 in the workweek. A $20 regular rate produces a $30 overtime rate. The calculation is done for each workweek on its own.⁴

Tipped Employees

For tipped workers, the regular rate is built on the full minimum wage, not just the lower cash wage paid after a tip credit. The employer divides total remuneration (cash wages, the tip credit amount, commissions, and bonuses) by total hours worked. Tips received above the tip credit amount are not part of the regular rate.⁷ This is one of the most commonly botched calculations in the restaurant industry and consistently results in underpayment.

The Fluctuating Workweek Method

Some employers use an alternative called the fluctuating workweek. An employee gets a fixed weekly salary that covers all hours worked, whether 35 one week or 50 the next, and the overtime premium is only an additional half-time (0.5 times the regular rate) rather than time-and-a-half, because the salary already covers the straight-time portion of every hour.⁸

This method is only legal if the employee’s hours genuinely vary week to week, both sides clearly understand the salary covers all hours regardless of the count, and the employee receives the full salary even in weeks when hours dip below the normal schedule.⁸ If the salary is meant to cover a fixed 40-hour schedule, the employer cannot use this method. Some try to retrofit the arrangement after the fact to reduce what they owe.

Who Is Exempt

Not every worker is entitled to overtime. Most of the common exemptions require passing both a salary test and a duties test.

Salary Threshold

As of 2026, the minimum salary for the main white-collar exemptions is $684 per week, or $35,568 per year. The Department of Labor tried to raise that threshold through a 2024 rule, but a federal court in Texas vacated the rule in November 2024, leaving the 2019 threshold in place. A separate highly compensated employee exemption applies to workers earning at least $107,432 per year, provided they perform at least one exempt duty and receive at least $684 per week on a salary basis.⁹

Meeting the salary threshold is not enough on its own. The employee must also satisfy the duties test for a recognized exemption.

Duties Tests

The four main white-collar exemptions each have their own requirements.¹⁰

Executive: the employee’s primary duty is managing the business or a recognized department, and they have genuine authority to hire, fire, or make recommendations that carry real weight.
Administrative: the employee primarily performs office or non-manual work related to business operations and regularly exercises independent judgment on matters that meaningfully affect the company.
Professional: the work requires advanced knowledge in a specialized field, typically gained through extended formal education, such as law, medicine, engineering, or accounting.
Outside sales: the employee’s primary duty is making sales or obtaining contracts, and they work away from the employer’s premises to do it. Outside sales employees are not subject to the salary threshold.

Job titles do not decide exemption. What matters is what the person actually does day to day. Misclassifying a non-exempt employee as exempt is one of the most common and expensive FLSA mistakes.

Computer Professionals

A separate exemption covers certain computer professionals, including systems analysts, programmers, and software engineers whose work involves designing, developing, or testing computer systems and programs. They can be paid either the $684 weekly salary or an hourly rate of at least $27.63.¹¹ Help desk technicians and hardware repair workers generally do not qualify.

Commissioned Retail and Service Employees

Employees of retail or service businesses are exempt if two conditions hold: their regular rate exceeds one and one-half times the federal minimum wage, and more than half their compensation over a representative period comes from commissions.⁶ With the federal minimum wage at $7.25, the regular rate must exceed $10.88 per hour.¹² This one comes up often for car salespeople and commissioned retail workers.

If You Are Not Paid Correctly

When an employer fails to pay proper overtime, federal law entitles the affected employee to the full amount of unpaid overtime plus an equal amount in liquidated damages, effectively doubling the recovery. The employer must also pay the employee’s reasonable attorney’s fees and court costs.¹³ A court can reduce or eliminate the liquidated damages only if the employer proves it acted in good faith with a reasonable basis for believing it was complying with the law.¹⁴ That is a hard standard to meet.

A standard FLSA overtime claim must be filed within two years of the violation. If the employer knowingly disregarded the law, the deadline extends to three years.¹⁵ Each paycheck that shortchanges you starts its own clock, so the window often covers more back pay than employees expect.

Retaliation Is Prohibited

Federal law prohibits firing, demoting, cutting hours, or otherwise punishing an employee for filing an overtime complaint, participating in an investigation, or testifying in an FLSA proceeding.¹⁶ The protection covers oral as well as written complaints and applies whether the complaint went to the Department of Labor or was raised internally with the employer.¹⁷

An employee who is retaliated against can file a complaint with the Wage and Hour Division or bring a private lawsuit. Available remedies include reinstatement, lost wages, and liquidated damages equal to the lost wages.¹⁷ A retaliation claim can succeed even if the underlying overtime complaint turns out to be wrong; the law protects a good-faith complaint, not just a winning one.

1
U.S. Department of Labor. Overtime Pay
2
U.S. Department of Labor. Fair Labor Standards Act of 1938
3
eCFR. 29 CFR 778.105 – Workweek
4
U.S. Department of Labor. Fact Sheet 23 – Overtime Pay Requirements of the FLSA
5
U.S. Department of Labor. Fact Sheet 22 – Hours Worked Under the Fair Labor Standards Act
6
Office of the Law Revision Counsel. 29 USC 207 – Maximum Hours
7
eCFR. 29 CFR 531.60 – Overtime Payments
8
U.S. Department of Labor. Fluctuating Workweek Method of Computing Overtime Under the FLSA
9
U.S. Department of Labor. Earnings Thresholds for the Executive, Administrative, and Professional Exemption
10
eCFR. 29 CFR Part 541 – Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Computer and Outside Sales Employees
11
U.S. Department of Labor. Fact Sheet 17E – Exemption for Employees in Computer-Related Occupations Under the FLSA
12
U.S. Department of Labor. State Minimum Wage Laws
13
Office of the Law Revision Counsel. 29 USC 216 – Penalties
14
Office of the Law Revision Counsel. 29 USC 260 – Liquidated Damages
15
Office of the Law Revision Counsel. 29 USC 255 – Statute of Limitations
16
Office of the Law Revision Counsel. 29 USC 215 – Prohibited Acts
17
U.S. Department of Labor. Fact Sheet 77A – Prohibiting Retaliation Under the FLSA