When Do I Have to Pay Overtime?
Are your employees entitled to overtime pay? Learn the rules here.
Federal and state laws require most employers to pay overtime. The overtime premium is 50% of the employee's usual hourly wage. This means an employee who works overtime must be paid "time and a half" -- the employee's usual hourly wage plus the 50% overtime premium -- for every overtime hour worked.
These laws contain many exceptions, so not all employees are entitled to overtime. Employees who are eligible for overtime are called “non-exempt” employees, and those who are not eligible for overtime are called “exempt” employees.
When to Pay Overtime: Weekly vs. Daily Standard
Federal and most state laws impose a weekly overtime standard, which means that non-exempt employees are entitled to overtime for every hour more than 40 that they work in a week, regardless of how many hours they work in a day. For example, Alex is a non-exempt employee who works 12 hours on Monday and 6 hours on Tuesday (and doesn’t work any more hours in the week). He is not entitled to receive overtime under the weekly overtime standard, even though he worked more than eight hours on Monday, because he didn't work more than 40 hours that week.
California and a handful of other states have a daily overtime standard, which means that non-exempt employees are entitled to overtime for every hour more than eight that they work in a day and every hour more than 40 that they work in a week. Let’s take Alex from the paragraph above. In a daily overtime state, he would be entitled to overtime pay for the four extra hours he worked on Monday, even though he didn’t even come close to working 40 hours in the week.
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