The Ultimate Guide to US Overtime Pay Laws by State (2026)

What employers need to know

Overtime under federal law generally requires employers to pay eligible workers at least 1.5× their regular rate for hours worked over 40 in a workweek. Several states add daily overtime, higher salary thresholds, or double-time requirements.

This guide summarizes federal rules under the FLSA, highlights state exceptions and daily-overtime/double-time states, and gives practical calculation examples and a compliance checklist so you can mitigate your risk of penalties.

Federal overtime pay laws

Under the FLSA, federal overtime rules are straightforward: Most employees are entitled to overtime at 1.5× their regular rate for hours worked over 40 in a workweek. However, exempt employees—those meeting both a duties test and a salary threshold—are excluded from overtime protections. The complication is that many states have stricter rules than the federal floor, and when state law is more protective of workers, the state rule wins.

Federal rule (FLSA): 1.5 times pay for hours over 40/week; exemptions apply if an employee meets both the duties test and the federal salary threshold.

Exempt vs. non-exempt employees

Whether an employee qualifies for overtime depends on two factors: job duties and salary. An employee is typically exempt only if they perform primarily executive, administrative, or professional duties and earn at least the applicable federal exempt salary threshold.

Common exempt roles include managers, salaried professionals, and certain IT roles. However, job title alone doesn't determine exempt status, the actual day-to-day duties do. A person called a "manager" who mostly performs hourly tasks may actually be non-exempt and entitled to overtime.

Important regulatory note: The federal exempt salary threshold is currently $684 USD per week ($35,568 annually), per the 2019 rule that was restored in May 2026 after courts vacated the 2024 rule. However, many states have set higher exempt salary thresholds. When state law is stricter, follow the state requirement.

Many employers misclassify workers as exempt to avoid overtime costs. This is a major compliance risk, as misclassification can lead to back pay for years of unpaid overtime, plus liquidated damages (doubling the owed amount), attorney fees, and government penalties.

Learn more: Exempt vs. Non-Exempt Worker Status: What is the Difference?

Calculating overtime pay

Federal rule: Overtime = (regular rate) × 1.5 × (overtime hours)

The "regular rate" includes the base hourly wage plus nondiscretionary bonuses, shift differentials, and other earnings required by law or contract. It excludes truly discretionary bonuses, gifts, and certain fringe benefits.

Example: An employee earning $20/hour who works 45 hours in a week owes: $20 × 1.5 × 5 OT hours = $150 in overtime pay.

State overtime pay laws

About half of US states follow the federal FLSA floor (40-hour workweek = overtime trigger). The other half—including California, Nevada, New York, and several others—have daily overtime triggers, higher salary thresholds, or double-time rules. When state law is stricter, employers must follow the state rule.

State overtime quick-reference

For fast compliance checks, use this approach before diving into a state's statute:

1. Identify the workweek and whether the state uses daily or weekly triggers (e.g., California daily overtime at 8/12 hours).
2. Check whether the state requires double-time or higher rates (California: double-time at >12 hours/day or 7th consecutive day).
3. Confirm any state-specific exempt salary thresholds — many states have higher exempt minimums than federal law.
4. Note industry exceptions (agriculture, healthcare, rail, and certain public employees may have different rules).

If you’re managing payroll manually, consider keeping a one-page table that lists per state: weekly overtime trigger (usually 40 hrs), daily overtime trigger (if any), double-time rules (if any), exempt salary threshold with effective date, and the authoritative state statute link.

Example reference entries:

• California: Daily OT over 8 hours; double-time over 12 hours or seventh consecutive day
• New York: New York overtime standards apply statewide, but higher exempt salary thresholds apply in select jurisdictions
• Nevada: Daily overtime rules for employees earning below threshold; weekly OT at >40 hours
• Washington: Washington overtime requirements at >40 hours/week; higher salary threshold applies

For your full compliance setup, link each state name directly to the state labor department or statute so payroll and HR can verify current rates and effective dates during audits.

Deel helps HR and payroll teams avoid chasing compliance manually. Deel’s Time Tracking supports working-time controls, break policies, custom overtime rules, and geofencing so your team can manage compliance workflows without re-entry or spreadsheet reconciliation. When state rules change, your overtime calculations and audit records stay current automatically.

How to calculate overtime pay

Overtime calculations differ by pay type. Use these steps and examples:

Hourly employees

1. Calculate regular rate: Base hourly wage + certain nondiscretionary bonuses/shift differentials included by law
2. Calculate overtime pay: Regular rate × 1.5 × overtime hours

Example: $20/hr, 45 hours worked → OT hours = 5; OT pay = $20 × 1.5 × 5 = $150; total gross = $900 base + $150 OT = $1,050.

Salaried non-exempt employees

1. Convert weekly salary to regular hourly rate by dividing the salary by the number of hours the salary is intended to cover (common approach: salary ÷ 40 if salary covers 40 hours).
2. If salary is meant to cover fewer hours, prorate accordingly and calculate OT on the derived hourly rate.

Example: $800/week salary intended to cover 40 hours → regular hourly = $20. If employee works 50 hours → OT = $20 × 1.5 × 10 = $300; total gross = $800 + $300 = $1,100.

Fluctuating workweek method (where allowed)

Some states allow a lower overtime premium if the employee has a fixed salary for hours that vary. However, many states prohibit or strictly limit this method. Consult your state labor department or legal counsel before using it.

Commissions and bonuses

Some commissions and nondiscretionary bonuses must be included in the regular rate for overtime calculations. Truly discretionary bonuses paid after work is complete may be excluded, but only if the decision to award them is made at the employer's sole discretion and isn't promised to the employee.

Recordkeeping

Maintain daily and weekly time records, paystubs showing hours and overtime calculations, and written overtime approval policies. This documentation is essential if you're ever audited or face an overtime claim.

Automation reduces manual error: Deel Time Tracking helps companies capture hours where work happens, approve them in a connected workflow, and sync approved time directly into payroll. This eliminates manual calculations and the recordkeeping risks that come with spreadsheets—every hour is tracked, approved, and documented automatically.

Variations by industry and state exceptions

Several industries have special rules. Agricultural workers, railroad employees, certain healthcare workers, and public-sector employees may be exempt from overtime under federal law. Additionally, some states carve out specific industries. For example, California has different rules for certain agricultural and domestic workers. Always verify your industry and state combination.

Employer compliance checklist

Use this checklist to reduce risk:

• Map employees to the state law where they physically work: Document remote employees' primary work location. If an employee works in multiple states, apply the rule that benefits the employee
• Classify roles carefully: Maintain job descriptions and conduct a duties test for exempt/non-exempt classification. Update classifications when duties change
• Track hours accurately: Implement timekeeping solutions like Deel’s Time Tracking feature with approvals and audit logs. Daily and weekly tracking is essential for compliance
• Train managers on overtime approval: Ensure they understand which roles are overtime-eligible and the consequences of unauthorized overtime
• Reconcile payroll monthly: For overtime pay, commissions, and bonuses included in the regular rate. Errors compound quickly
• If you discover misclassification or missed OT: Consult legal counsel or your payroll provider immediately. Calculate back pay, interest, and potential liquidated damages. Prepare to remediate with corrected paystubs and documentation
• Consider payroll automation with time tracking integration: Deel Payroll - US helps companies run accurate US payroll with time tracking, break policy configuration, overtime calculation, geofencing, and approved hours connected to payroll

Need help managing overtime compliance?

Deel Payroll - US helps companies run accurate US payroll with time tracking, break policy configuration, overtime calculation, and geofencing. Deel’s Time Tracking feature closes the loop between work and pay by capturing approved hours and syncing them directly into payroll without manual re-entry or reconciliation.

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