What are the basic rules of paid overtime?

Who qualifies for overtime? How much should I pay them?

The Fair Labor Standards Act (FLSA) states that non-exempt employees must be paid time and one-half their regular rate of pay for all hours worked over 40 in a seven-day workweek. Nonexempt employees are defined under the FLSA, and appropriate classification of employees is critical. In accordance with the FLSA, overtime pay must be calculated on a weekly basis—and not over a two-week (or longer) pay period—to allow for more flexible scheduling. 

The FLSA also requires employers to pay all overtime hours an employee actually works, even if that overtime is not authorized before it actually takes place. Employers may choose to discipline an employee for working unauthorized overtime, but the overtime hours must be paid. 


Simply stated, when a position is considered exempt, it means that individuals in that position are exempted from the overtime provision of the Fair Labor Standards Act (FLSA). An employer uses the FLSA salary and duties test to determine status. Exempt employees are paid on a salaried basis; in other words, they are paid the same amount every week with no deductions for quantity or quality of work.

To qualify for exemption, employees generally must be paid at not less than $684* per week on a salary basis. These salary requirements do not apply to outside sales employees, teachers, and employees practicing law or medicine. Exempt computer employees may be paid at least $684* on a salary basis or on an hourly basis at a rate not less than $27.63 an hour.

Individuals working in positions that are nonexempt are covered by the overtime provision of the FLSA. These individuals are entitled to receive overtime pay (1½ times regular pay) for time worked beyond 40 hours in a workweek.

The FLSA does not apply to non-covered workers. Some noncovered workers include independent contractors, prisoners, and elected officials.

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