Understanding US Overtime Laws
Last updated: February 6, 2026
Setting up correct overtime policies is crucial for payroll compliance. This article explains federal and state overtime laws in the US.
Disclaimer: This article is for informational purposes only and should not be considered legal or tax advice. Overtime laws are subject to change and we recommend consulting with a qualified professional to ensure compliance with all federal, state, and local regulations applicable to your business.
Federal Overtime Law (The FLSA)
The Fair Labor Standards Act (FLSA) establishes the baseline for overtime pay in the United States.
The rule: The FLSA requires that most employees receive overtime pay at a rate of not less than 1.5 times their regular rate of pay for all hours worked over 40 hours in a single workweek.
What is a "workweek"? A workweek is a fixed and regularly recurring period of 168 hours - seven consecutive 24-hour periods. It doesn't have to coincide with the calendar week.
Key note on exemptions: Overtime policies are not applicable for exempt - “Annual Salary/No overtime” or “Salary” employees.
State Overtime Laws
While federal law sets the minimum, many states have enacted their own overtime laws that are more generous to employees. State overtime rules often introduce requirements beyond the weekly 40-hour threshold. It is your responsibility to check the local laws for each state where you have employees and configure your payroll settings accordingly
Daily Overtime
Some states require you to pay overtime for hours worked beyond a certain number in a single day, regardless of the total hours worked in the week.
Common Rule: A common daily overtime rule is paying 1.5x the regular rate for all hours worked over 8 hours in a single workday.
States with Daily Overtime Rules: States like California, Alaska, Nevada, and Colorado have some form of daily overtime requirement.
Daily Double Overtime
A few states take daily overtime a step further with "double time." This is a higher overtime rate for working an excessive number of hours in one day.
Common Rule: A prime example is California, which requires 2x the regular rate (double time) for all hours worked over 12 hours in a single workday.
7th Consecutive Day Overtime
Some state laws mandate overtime pay for work performed on the seventh consecutive day of a workweek.
Common Rule: The rules can vary. For example, California requires 1.5x pay for the first 8 hours worked on the 7th consecutive day, and 2x pay for any hours over 8 on that same day. Other states like Kentucky may also have 7th-day provisions.
How to Set Up Overtime in Your Payroll
To ensure compliance, you must:
Identify the state(s) where your employees work.
Research the specific overtime laws for each of those states. Resources like the Department of Labor website or reputable payroll guides can be helpful.
Configure overtime policies to reflect the correct weekly, daily, daily double, or 7th-day overtime rules for each employee's location.