Summaries of the federal Fair Labor Standards Act (FLSA), employee classification options, and state-specific overtime laws can be found below.
Important: If you use Gusto Time Tracking, refer to the regulations for the state of your employees' assigned work location in Gusto.The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in federal, state, and local governments.
The Department of Labor states:
“For covered, nonexempt employees, the Fair Labor Standards Act (FLSA) requires overtime pay to be at least one and one-half times an employee's regular rate of pay after 40 hours of work in a workweek.
Some states have their own overtime laws. In cases where an employee is subject to both the state and federal overtime laws, the employee is entitled to overtime according to the higher standard (i.e., the standard that will provide the higher overtime pay).
If you aren't sure how your employees should be classified, the Department of Labor has published some helpful guidelines.
Generally, there are three classifications:
Hourly/Eligible for overtime (Hourly/Non-exempt)
Earns wages based on the number of hours the employee works & earns overtime pay when applicable. This is the most common classification since most employees in the United States are required to be paid at least the federal minimum wage for all hours worked plus overtime pay at one and one-half times the regular rate of pay for all hours worked over 40 hours in a workweek.
Salary/Eligible for overtime (Salary/Non-exempt)
Earn a fixed salary if they work 40 hours or less per week. Earn overtime if they work more than 40 hours per week (regulations vary per state).
Salary/No overtime (Salary/Exempt)
Earns a fixed salary regardless of how many hours the employee works. Some employees may be exempt from overtime pay if they are employed as an executive, administrative, professional, or outside sales, as well as certain computer employees. However, job titles alone do not determine exempt status.
To be exempt from overtime, employees generally should be paid on a salary basis of at least $684 per week (equivalent to $35,568 per year for a full-year worker), and their specific job duties must meet a certain set of requirements.
Note: Salaried exempt employees are not eligible for overtime pay.
If you have an employee that will be receiving a commission or other types of incentive payments to help meet the standard salary level, check the box, "This employee will receive commissions or other types of additional compensation."
Commissions and other types of additional compensation can be added each time payroll is run.
Commission Only/Eligible for overtime (Commission Only/Non-exempt)
Earn wages based only on commission. Commission only employees need to make at least minimum wage for hours worked.
Commission Only/No overtime (Commission/Exempt)
Earns wages based only on commission. Some employees may be exempt from overtime pay if they are employed as an executive, administrative, professional, or outside sales, as well as certain computer employees. However, job titles alone do not determine exempt status.
To be exempt from overtime, employees generally should be paid at least $684 per week (equivalent to $35,568 per year for a full-year worker), and their specific job duties must meet a certain set of requirements.
If you have your payroll on Autopilot®, you'll need to enter a commission before the payroll runs—they're set to a $0 salary so they won't be paid if no commission is entered.
S-Corp owners
Review this article to set up an employee as an owner.
You can also edit these hours in payroll if they need to be adjusted for the pay period.
Example: There is a total of 2,080 working hours per year. Joe is paid every other week, for a total of 26 pay periods in the year. 2,080 total annual hours divided by 26 pay periods equals 80 hours per pay period.
If you have an employee who works more or less than the default 40 hours per week, and you want their actual hours worked to be reflected on the paystub, you'll need to add them as an hourly employee and add their specific default hours.
The federal baseline for overtime is 1.5 x RRP (regular rate of pay) for all hours over 40 in a week.
| Overtime Type | Hourly rate multiplier (RRP= Regular rate of pay) |
| Weekly overtime | 1.5 times RRP |
| Daily overtime | 1.5 times RRP |
| Daily double overtime | 2.0 times RRP |
| 7th consecutive day of any one workweek | 1.5 times RRP |
This table was last revised September 2019
State | Overtime Occurs After... | Overtime Calculation(RRP = Regular rate of pay) | Explanation |
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| Alaska |
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| Arizona |
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| Arkansas |
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| California |
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| Colorado |
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| Connecticut |
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| Delaware |
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| Florida |
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| Georgia |
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| Hawaii |
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| Idaho |
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| Illinois |
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| Indiana |
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| Iowa |
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| Kansas |
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| Kentucky |
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| Louisiana |
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| Maine |
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| Maryland |
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| Massachusetts |
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| Michigan |
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| Minnesota |
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| Mississippi |
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| Missouri |
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| Montana |
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| Nebraska |
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| Nevada |
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| New Hampshire |
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| New Jersey |
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| New Mexico |
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| New York |
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| North Carolina |
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| North Dakota |
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| Ohio |
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| Oklahoma |
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| Oregon |
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| Pennsylvania |
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| Rhode Island |
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| South Carolina |
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| South Dakota |
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| Tennessee |
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| Texas |
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| Utah |
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| Vermont |
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| Virginia |
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| Washington |
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| Washington DC |
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| West Virginia |
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| Wisconsin |
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| Wyoming |
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Standard full time hours are determined as 8 hours per day x 40 hours per week x 52 weeks in a year = 2080
Annual salary / total annual hours (# of hours worked x 52 weeks)
More than 8 hours in a single workday:
More than 12 hours in a single workday:
This example is related California's state overtime rules. Please refer to the table for your state overtime rules.
Seven days in a row within a single pay period: