What Is FLSA Overtime? Rates, Exemptions, and Hours Worked

FLSA overtime is the federal rule requiring most employers to pay covered workers at least one and a half times their regular rate for every hour worked beyond 40 in a single workweek.¹ It comes from the Fair Labor Standards Act, enforced by the Department of Labor’s Wage and Hour Division, and it reaches the majority of American workers. An employer who fails to pay it owes the unpaid wages plus an equal amount in liquidated damages.²

Who Is Covered

The law reaches workers two ways. Enterprise coverage applies when the business has at least $500,000 in annual gross sales and employees who handle goods that have moved in interstate commerce.³ Hospitals, schools, preschools, and government agencies are covered regardless of revenue.

Individual coverage catches workers whose employers fall below the $500,000 line. If your own work involves interstate commerce — shipping products across state lines, regularly calling or emailing out-of-state contacts, or traveling between states for the job — you’re covered on your own. Between the two paths, most non-exempt workers in the country fall under the FLSA.

When Overtime Kicks In

Overtime is owed only after you pass 40 hours inside a single workweek. Federal regulations define that workweek as a fixed, recurring block of 168 hours — seven consecutive 24-hour periods.⁴ Your employer picks the start day and time, and it doesn’t need to be Monday morning. Once set, it must stay fixed unless the employer makes a permanent change that isn’t designed to dodge overtime.

Employers cannot average hours across weeks. Work 50 hours one week and 30 the next, and you’re owed 10 hours of overtime for the first week. The light second week does not cancel it out, even if you’re paid biweekly or monthly.⁵ Each workweek stands alone.

Federal law does not cap how many hours an adult can be scheduled. Nothing stops an employer from asking for 60 or 80 hours in a week; the law only requires that every hour past 40 be paid at the premium rate.¹ Some states trigger overtime after a set number of hours in a single day, but federal law does not.

How the Rate Is Calculated

The overtime rate is at least 1.5 times your “regular rate of pay” for every hour past 40.¹ That’s a floor. Employers can pay more under a contract or company policy, never less.

The regular rate is often higher than your base hourly wage. It includes most compensation tied to your work: commissions, shift differentials, and non-discretionary bonuses promised in advance based on production, attendance, or similar metrics.⁶ It excludes discretionary holiday gifts, expense reimbursements, and vacation or sick leave payouts.⁷

When extra pay is in the mix, add all non-excluded compensation for the workweek to your straight-time earnings and divide by total hours worked. That figure is your regular rate. Multiply it by 1.5 and you have the required overtime rate.⁶

Exempt vs. Non-Exempt Employees

Not everyone qualifies for overtime. The FLSA exempts employees in bona fide executive, administrative, professional, and outside sales roles.⁸ To be truly exempt, a worker has to clear three separate tests. Fail any one and the employee is non-exempt and owed overtime.

Salary Basis and Salary Level

An exempt employee must be paid a fixed, predetermined salary that doesn’t change based on hours worked or quality of work. That salary must meet the federal minimum of $684 per week, or $35,568 per year.⁹ The Department of Labor tried to raise this to $844 per week in mid-2024 and to $1,128 per week in January 2025, but a federal district court vacated the entire rule in November 2024. The enforceable threshold reverted to $684 per week and remains there in 2026.

A separate track exists for highly compensated employees earning at least $107,432 per year, with at least $684 per week paid on a salary basis, if they regularly perform at least one duty of an exempt executive, administrative, or professional employee.⁹ Several states set their own salary thresholds above the federal figure. Where a state’s number is higher, the employer must meet the higher standard.

The Duties Test

Meeting the salary requirement isn’t enough. What the worker actually does day to day has to match the exemption. The executive exemption requires that the employee’s primary duty is managing the business or a recognized department, that they regularly direct the work of at least two other employees, and that they have real authority over hiring and firing or meaningful input into those decisions.¹⁰

Administrative exemptions require that the main work involves office or non-manual tasks directly related to business operations or management, with authority to exercise independent judgment on significant matters. Professional exemptions apply where the work demands advanced knowledge in a specialized field, of the sort typically acquired through extended formal education rather than on-the-job training.

Federal regulations specifically exclude police officers, firefighters, paramedics, and similar emergency personnel from the white-collar exemptions, no matter what they earn.¹¹ Their primary duties aren’t management, office work, or specialized intellectual tasks.

If You’re Classified as an Independent Contractor

Independent contractors are not covered by the FLSA at all. That makes classification a high-stakes question, and one employers sometimes get wrong, whether through genuine confusion or to avoid overtime obligations.

The Department of Labor uses an “economic reality” test to decide who is truly a contractor and who is really an employee. In February 2026, the Department proposed a rulemaking that would center the analysis on two core factors: how much control the worker has over the work, and whether the worker has a genuine opportunity for profit or loss based on their own initiative and investment.¹² When those two point in different directions, other factors weigh in: how much skill the work requires, how permanent the relationship is, and whether the work is part of the employer’s core production.

What matters is the working arrangement, not the label. If your employer sets your schedule, provides your tools, and controls how you do the work, calling you a contractor on paper won’t hold up.

Overtime for Tipped Employees

An employer using a tip credit to pay a lower direct cash wage still has to calculate overtime from the full federal minimum wage of $7.25 per hour, not the reduced cash rate. The tip credit does not shrink the overtime premium.

Multiply the full minimum wage by 1.5, then subtract the tip credit. With a $7.25 minimum wage and a maximum $5.12 tip credit, the overtime rate is $10.87 per hour, and after subtracting the $5.12 credit, the employer must pay $5.75 per hour in direct cash wages for each overtime hour.¹³ Tips cover the rest of the premium.

What Counts as Hours Worked

Overtime fights often turn on what counts as work. Training and travel are the two biggest sources of disputes.

Training and Meetings

Employer-sponsored training, lectures, and meetings count as compensable time unless all four of these conditions are met: the session falls outside your regular working hours, attendance is truly voluntary, the content isn’t directly related to your current job, and you don’t do any productive work during it.¹⁴ If any one condition fails, the time counts and pushes you toward the 40-hour threshold.

Travel

Your normal commute doesn’t count. Travel between job sites during the workday does. Overnight travel counts as work time whenever it falls within your normal working hours, even on days you wouldn’t ordinarily work.¹⁵ If your usual schedule is 9 to 5 and you spend a Saturday flying for a business trip, the hours between 9 and 5 on that Saturday are compensable. Travel outside those hours as a passenger on a plane, train, or bus generally is not.

Can Your Employer Give Comp Time Instead

Some employers offer paid time off in place of cash overtime. Under federal law, that arrangement is legal only for state and local government employees. Private-sector employers cannot substitute comp time for overtime pay, even if the employee agrees.¹

For government workers who do receive it, comp time accrues at the same time-and-a-half rate: one overtime hour earns 1.5 hours off. Federal law caps accrual at 480 hours for public safety and emergency response employees and 240 hours for other government workers. Past the cap, the employer owes cash.¹ When a government employee leaves, any unused comp time is paid out at the higher of their final rate or their average rate over the prior three years.

Recovering Unpaid Overtime

Workers who aren’t paid proper overtime have two main paths. You can file a complaint with the Department of Labor’s Wage and Hour Division, which investigates employers through payroll audits, record reviews, and confidential employee interviews.¹⁶ You can also sue your employer directly, alone or with coworkers in a group action.

A successful claim recovers the full unpaid overtime plus an equal amount in liquidated damages, effectively doubling what you’re owed. The court must also award reasonable attorney’s fees.²

The deadline is tight. You have two years from each missed overtime payment to file. If the violation was willful, meaning the employer knew the law and chose to ignore it, the deadline extends to three years.¹⁷ Each paycheck is a separate violation, so the clock runs independently on each underpayment. Every pay period that ages past two years is money you can no longer recover.

Federal law also bars retaliation. Your employer cannot fire you, demote you, or take any adverse action because you filed a complaint or cooperated with an investigation. If they do, you can sue for reinstatement, lost wages, and additional damages.² One practical note: employers are required to keep detailed payroll and timekeeping records, and when they haven’t, courts tend to resolve ambiguity against the employer who failed to keep them.¹⁸

1
Office of the Law Revision Counsel. 29 USC 207 – Maximum Hours
2
Office of the Law Revision Counsel. 29 USC 216 – Penalties
3
Office of the Law Revision Counsel. 29 USC 203 – Definitions
4
eCFR. 29 CFR Part 778 – Overtime Compensation
5
eCFR. 29 CFR Part 778 – Overtime Compensation – Section 778.104
6
U.S. Department of Labor. Fact Sheet 56C – Bonuses Under the FLSA
7
eCFR. 29 CFR Part 778 Subpart C – Payments That May Be Excluded From the Regular Rate
8
Office of the Law Revision Counsel. 29 USC 213 – Exemptions
9
U.S. Department of Labor. Earnings Thresholds for the Executive, Administrative, and Professional Exemption
10
eCFR. 29 CFR 541.100 – General Rule for Executive Employees
11
U.S. Department of Labor. Fact Sheet 17J – First Responders and the Part 541 Exemptions Under the FLSA
12
U.S. Department of Labor. Notice of Proposed Rule – Employee or Independent Contractor Status Under the FLSA
13
U.S. Department of Labor. FLSA Overtime Calculator Advisor – Overtime Calculation Examples for Tipped Employees
14
eCFR. 29 CFR Part 785 – Hours Worked
15
eCFR. 29 CFR 785.39 – Travel Away From Home Community
16
U.S. Department of Labor. Fact Sheet 44 – Visits to Employers
17
Office of the Law Revision Counsel. 29 USC 255 – Statute of Limitations
18
eCFR. 29 CFR Part 516 – Records To Be Kept by Employers