For salaried non-exempt employees, divide their weekly salary by the standard 40-hour workweek to calculate their regular hourly rate. Federal law requires that all amounts, including nondiscretionary bonuses be included in the regular rate when calculating overtime. Federal law requires that all amounts, including nondiscretionary bonuses, be included in the regular rate when calculating overtime. Examples include, but are not limited to, coffee, snacks, coffee cups, t-shirts, raffle prizes, certain sign-on bonuses, and certain longevity bonuses. States with daily overtime include Alaska, California, Colorado and Nevada. Generally, if employees in these states work more than a certain number of hours per day, they may be entitled to overtime pay.

What else do you need to know about overtime in California?

• The regular rate of pay includes a number of different kinds of remuneration, such as hourly earnings, salary, piecework earnings, and commissions.
• However, many employees work unusual shifts and go above and beyond this standard, putting in more than the average 40 hours.
• An employee is entitled to compensation for overtime as provided by federal and state law.
• Most importantly, Timeero automatically calculates employees’ overtime earnings based on their regular pay rate.
• The Fair Labor Standards Act (FLSA), reinforced by California labor laws, dictates how bonuses are incorporated into the regular rate of pay to calculate overtime.
• You need a platform that supports all of your unique requirements and facilitates the reporting you need after the fact.

Many people believe that if someone is paid a salary instead of an hourly wage, they’re automatically exempt from overtime pay. Salaried employees earning below $684 per week or not meeting the job duties test for exemptions are eligible for overtime pay. Federal overtime law is part of the Fair Labor Standards Act (FLSA), a weighted overtime cornerstone of U.S. labor law that ensures workers are treated fairly when it comes to pay, hours, and working conditions. Established in 1938, the FLSA introduced essential protections for employees, many of which still shape workplace standards today. This definitive guide gives you a rundown of federal overtime law so you always know who’s owed overtime pay–and make sure to provide/receive it every time.

For Employees with Multiple Hourly Rates

A shift differential differs from overtime pay, which is federally required for nonexempt employees who work more than 40 hours a week. Overtime is calculated as time-and-a-half — 1.5 times the employee’s regular hourly rate. For example, someone earning $20 per hour would get $30 per hour for overtime hours. Under the Fair Labor Standards Act (FLSA), employers must pay non-exempt employees who work over 40 hours in a week an overtime rate of 1.5 times their hourly rate. Suppose an employer has employees who hold multiple positions within the business and, therefore, receive multiple pay rates.

Overtime Pay Laws States + Federal (2026 Update)

Multiply the hours worked in each position by the respective hourly rate, then add all earnings together. This fact sheet provides general information concerning the application of the overtime pay provisions of the FLSA . Employees can become administratively exempt by accepting a flat salary for a job that requires working extended hours. Emergency situations, times of business transition, and when resources are scarce often require longer shifts. Such shifts usually come without warning and can take their toll on the health, safety, and productivity of employees.

• All salaried employees must be paid overtime unless they meet the test for exempt status as defined by federal and state laws.
• Other professions that endure long work hours, such as practical nurses and paralegals, are also protected under the FLSA.
• Under both federal and state law, employers who fail or refuse to pay nonexempt employees the required overtime premium are subject to civil and criminal penalties.
• This means that even if you pay employees every two weeks, you must calculate overtime separately for each week.
• One week, the employee works four hours of overtime performing receptionist duties.
• This calculation ensures that John is fairly compensated for his overtime work, taking into account both of his pay rates.

For employees who earn multiple wages, blended overtime is the only way to remain in compliance with labor laws and ensure fair compensation. The misclassification of employees as independent contractors may deny workers minimum wage, overtime pay, and other protections. This final rule will reduce the risk that employees are misclassified as independent contractors while providing a consistent approach for businesses that engage with individuals who are in http://vizionsolutions.in/client-bookkeeping-solutions-types-benefits-more/ business for themselves. In most states, workers can be “forced” to work overtime by their company. Employers can schedule workers for any shift length or consecutive work days.

• Let’s assume that an employee in Nevada who is paid an hourly rate of $40 worked 8 hours on Monday, Tuesday, and Wednesday, 10 hours on Thursday, and 6 hours on Friday.
• An employer can use both the standard 40 hour overtime system and the 8 and 80 overtime system for different employees in the same workplace, but they cannot use both for a single individual employee.
• Most importantly, an employee’s regular pay rate cannot be less than minimum wage.
• It may begin on any day and hour the employer chooses as long as it repeats on a regular basis.
• Such payments may be credited towards overtime compensation due under the FLSA.

All hours actually worked by an employee, excluding hours paid for vacation, holiday or sick leave. Employers must use effective scheduling and strict authorizations to prevent the abuse of overtime rules. Aside from these exceptions, employees who refuse to work the extra hours can be disciplined and even terminated. For more information on how to classify employees for overtime, check with the Department of Labor or a lawyer experienced in employment law. If you believe your employer is not paying you overtime owed and you would like legal advice and representation, contact Weisberg Cummings, P.C. Many of the examples above are covered because the FLSA provides enterprise coverage to businesses with more than two employees and an annual dollar volume of at least $500,000 in sales or business.

For workers

Outside sales employees are exempt if their primary duty is making sales or securing service contracts and they work primarily away from their employer’s location. The Fair Labor Standards Act (FLSA) does not place any limits on the number of hours employees aged 16 and older may work in a single workweek. We’re still using FLSA to assume that five hours are overtime since it’s a 45-hour work week. Timeero’s California overtime rule feature enables you to track overtime worked in California without violating overtime requirements. The feature also allows you to https://www.bookstime.com/ compensate employees fairly, boosting their morale and productivity.

Example: Single Shift Differential

If an hourly employee works beyond 40 hours in a week, they are entitled to overtime pay. However, if that employee performs different roles at different pay rates, you may have to use a “blended rate” to calculate their overtime pay. This situation can make running payroll more challenging, especially if several employees are entitled to blended overtime pay.

First, learn more about the different types of advice that payroll specialists can provide. To avoid unauthorized overtime, toggle the “notify when a user goes overtime” button. Timeero will instantly notify you when an employee reaches the overtime threshold. If you didn’t authorize the overtime, you can contact the employee and stop them from working.