FLSA Overtime Rules: Who Qualifies & How to Calculate (2026)
Last Updated: 2026-06-10
Under the Fair Labor Standards Act (FLSA), covered non-exempt employees must receive overtime pay at no less than 1.5 times their regular rate for all hours worked over 40 in a workweek. There is no federal daily overtime limit, and weekend or holiday work does not automatically count as overtime. The exempt salary threshold is currently $684 per week ($35,568 per year) — the higher 2024 thresholds were struck down in federal court.
- Federal trigger: 40 hours per workweek — no federal daily overtime
- Rate: At least 1.5x the regular rate, not just the base wage
- Regular rate includes: Nondiscretionary bonuses, shift differentials, commissions
- Exempt threshold: $684/week — the 2024 increase was vacated in court
- No averaging: Each workweek stands alone, even on biweekly payroll
- OBBBA 2025–2028: Only the 0.5x premium portion is tax-deductible
What Is FLSA Overtime?
The Fair Labor Standards Act of 1938 is the federal law that sets the floor for minimum wage and overtime in the United States. Its overtime rule is short: covered, non-exempt employees must be paid at least one and a half times their regular rate for every hour worked beyond 40 in a workweek. Everything else — who counts as exempt, what goes into the regular rate, how bonuses change the math — is detail built on that one sentence.
Overtime pay = hours over 40 × (regular rate × 1.5)
The trigger is 40 hours in a workweek
A workweek is a fixed, regularly recurring period of 168 hours — seven consecutive 24-hour periods. It does not need to match the calendar week; it just has to stay consistent.
There is no federal daily overtime
Working a 14-hour day earns no FLSA overtime if the week stays at or under 40 hours. Daily overtime exists only in a few states, most notably California's 8-hour rule.
Each workweek stands alone
Hours cannot be averaged across two or more weeks. A 30-hour week followed by a 50-hour week means 10 overtime hours, even though the biweekly total is exactly 80 (29 CFR 778.104).
Weekends and holidays are not automatically overtime
The FLSA does not require extra pay for night, weekend, or holiday work as such. Those premiums come from state law, union contracts, or employer policy.
There is no cap on overtime hours
Federal law does not limit how many hours an adult employee may work in a week — it only requires the overtime rate to be paid for the hours past 40.
Who Gets FLSA Overtime? Exempt vs Non-Exempt
FLSA overtime protection follows your legal classification, not your job title or whether you receive a salary. To be exempt — that is, not entitled to overtime — an employee generally has to pass all three of these tests:
Salary basis test
You receive a fixed salary that does not go up or down with the quality or quantity of your work.
Salary level test
Your salary meets the federal minimum of $684 per week ($35,568 per year). Doctors, lawyers, teachers, and outside sales employees are not subject to this test.
Duties test
Your primary duties actually fit an exemption category — executive, administrative, professional, computer, or outside sales. Job titles alone prove nothing.
Fail any one of the three tests and you are non-exempt — your employer owes you overtime, whatever your job title says.
Where the salary threshold stands in 2026
- 2019 rule
$684/week ($35,568/year) takes effect
Set in the September 2019 final rule, effective January 2020. The highly compensated employee (HCE) threshold was set at $107,432 per year.
- April 2024
DOL raises thresholds to $844, then $1,128/week
The 2024 final rule raised the exempt threshold in two steps — July 1, 2024 and January 1, 2025 — with automatic updates every three years.
- Nov 15, 2024 Current law
Federal court vacates the 2024 rule nationwide
A Texas federal court struck down the entire 2024 rule. The 2019 thresholds — $684/week and $107,432 for HCEs — are back in force and remain the current law.
The six white-collar exemption categories
Executive
Primary duty is management; regularly directs two or more employees; has authority or strong input on hiring and firing.
Administrative
Office or non-manual work directly related to business operations, exercising discretion and independent judgment on significant matters.
Professional
Work requiring advanced knowledge in a field of science or learning, typically acquired through prolonged specialized education.
Computer
Systems analysts, programmers, software engineers, and similar roles meeting specific duties — paid at least $684/week or $27.63/hour.
Outside sales
Primary duty is making sales away from the employer's place of business. No salary minimum applies to this category.
Highly compensated (HCE)
Total annual compensation of at least $107,432 plus at least one exempt duty performed customarily and regularly.
The Regular Rate: What Counts Toward Overtime
The most misunderstood part of FLSA overtime is the base it multiplies. Overtime is 1.5 times the regular rate — and the regular rate is your total compensation for the week divided by total hours worked, not just your hourly wage. Federal regulations (29 CFR Part 778) spell out exactly what goes in and what stays out.
Regular rate = total pay for the workweek ÷ total hours worked
Must be included
- Nondiscretionary bonuses — production, attendance, or quality bonuses promised by contract, policy, or practice
- Shift differentials — extra pay for night, evening, or weekend shifts
- Commissions — all of them, whether paid weekly or deferred
- Piece-rate earnings
- Pay for non-productive hours worked, such as waiting time or on-call time at the workplace
May be excluded
- Discretionary bonuses — where the employer alone decides whether and how much to pay, with no prior promise
- Gifts, including holiday bonuses not tied to hours, production, or efficiency
- Paid time off — vacation, holiday, and sick pay for hours not worked
- Reimbursed business expenses, such as travel
- Premium pay of at least 1.5x for daily overtime, weekends, or holidays — it can instead be credited toward overtime owed
- Employer contributions to retirement and health plans
How to Calculate FLSA Overtime Pay
If you just need the generic steps — find the rate, multiply by 1.5, multiply by overtime hours — our step-by-step guide covers them. This section covers what the FLSA itself adds: how the regular rate changes the math when bonuses, salaries, or multiple pay rates are involved. All four examples follow the methods in 29 CFR Part 778.
How to calculate overtime, step by step →
Hourly worker, no extras
$20/hour, 45 hours in the workweek
- 1Regular rate = $20/hour
- 2Overtime rate = $20 × 1.5 = $30
- 3Pay = 40 × $20 + 5 × $30 = $800 + $150
$950 total
Hourly worker with a production bonus
29 CFR 778.110(b)$12/hour, 46 hours, plus a $46 nondiscretionary bonus
- 1Total pay = 46 × $12 + $46 bonus = $598
- 2Regular rate = $598 ÷ 46 = $13
- 3Overtime premium = 6 × ($13 × 0.5) = $39
$598 + $39 = $637 total — the bonus raised the overtime rate
Salaried non-exempt employee
29 CFR 778.113$760/week salary understood to cover 40 hours; worked 45
- 1Regular rate = $760 ÷ 40 = $19
- 2Overtime rate = $19 × 1.5 = $28.50
- 3Pay = $760 + 5 × $28.50 = $760 + $142.50
$902.50 total
Two jobs at different rates (weighted average)
29 CFR 778.11530 hours at $20 plus 20 hours at $15 in the same week
- 1Straight-time pay = 30 × $20 + 20 × $15 = $900
- 2Regular rate = $900 ÷ 50 = $18
- 3Overtime premium = 10 × ($18 × 0.5) = $90
$900 + $90 = $990 total — neither rate alone, but the blend
Want the math done for you, including double time and tax estimates?
Open the overtime calculatorFLSA Overtime vs Other Types of Overtime
Not every line labeled OT on a pay stub is FLSA overtime. The FLSA is a federal floor; states, union contracts, and employer policies can all add pay on top of it. Since 2025 the distinction has real money attached, because the federal OBBBA deduction only covers overtime the FLSA itself requires.
| Type | When it applies | Is it FLSA overtime? | OBBBA deduction? |
|---|---|---|---|
| FLSA overtime (federal) | Hours over 40 in a workweek | Yes | Premium portion qualifies for the OBBBA deduction |
| State daily overtime | Example — California: over 8 hours in a day | Only hours that also exceed 40 in the week | State-only overtime hours do not qualify |
| Union or contract overtime | Whatever the agreement says — e.g. OT after 35 hours | No, where it exceeds FLSA requirements | Contract-only overtime does not qualify |
| Employer policy premiums | Saturday premium, voluntary 1.5x, holiday pay | No | Does not qualify |
California daily overtime calculator →
Whole categories of workers sit outside the FLSA even when they earn real time-and-a-half. Railway and airline employees fall under the Railway Labor Act, most interstate truck drivers under the Motor Carrier Act exemption, and FLSA-exempt federal employees earn overtime under Title 5 instead. In all of these cases the overtime pay is real, but it is not FLSA overtime — which is exactly why some large employers told workers in 2025 that none of their overtime qualified for the new deduction.
FLSA Overtime and the OBBBA Tax Deduction (2025–2028)
The One Big Beautiful Bill Act created a federal income tax deduction for qualified overtime earned from 2025 through 2028 — and it defines qualified strictly in FLSA terms. Three things determine whether your overtime benefits:
Only FLSA-required overtime counts
Overtime that exists solely because of state law, a union contract, or employer policy is not qualified. If the FLSA does not require it, the deduction does not cover it.
Only the 0.5x premium is deductible
Of your 1.5x overtime rate, the 1.0x straight-time part stays fully taxable. At a $30 overtime rate on a $20 wage, only $10 per overtime hour is deductible — capped at $12,500 (single) or $25,000 (joint), phasing out above $150,000 / $300,000 MAGI.
Your W-2 will show it — from 2026
For tax year 2025, separate reporting was optional transition relief (often box 14). From tax year 2026, employers must report qualified overtime in box 12 under code TT.
Timelines, state conformity, and how to fill in Schedule 1-A are covered in the companion OBBBA guide.
Common Misconceptions About FLSA Overtime
Each of these comes up constantly in payroll forums and HR threads — and each one costs real money when it goes uncorrected.
Myth: I'm salaried, so I can't get overtime.
Reality: Salaried non-exempt employees earn overtime too. Exemption depends on the salary level and duties tests — not on how your pay is delivered. A salary below $684 per week makes you non-exempt almost regardless of duties.
Myth: Paying 1.5x the hourly wage always satisfies the FLSA.
Reality: The multiplier applies to the regular rate, which includes nondiscretionary bonuses, shift differentials, and commissions. An employer who pays 1.5x the bare wage but ignores a production bonus is underpaying overtime.
Myth: Weekend, holiday, or night work automatically earns overtime.
Reality: Federal law only counts hours over 40 in the workweek. Weekend and holiday premiums come from state law, contracts, or employer policy — generous, but not FLSA overtime.
Myth: All overtime qualifies for the 2025 no-tax-on-overtime deduction.
Reality: Only the premium portion of FLSA-required overtime qualifies. Railway Labor Act employees, state-only daily overtime, and contract overtime are excluded — some large employers sent employees letters in 2025 saying exactly this.
Myth: Overtime is calculated over the pay period.
Reality: It is calculated per workweek, full stop. On biweekly payroll, a 30-hour week plus a 50-hour week means 10 overtime hours — averaging the two to 40 is illegal (29 CFR 778.104).
Myth: My employer decides who is exempt.
Reality: Classification must pass the legal tests. Labeling a role exempt to avoid overtime is misclassification, which courts and the DOL treat as owed back pay plus penalties.
You know the rules — now check your paycheck
Run your hours, rate, and bonuses through the calculator to see what a correct FLSA overtime paycheck looks like.
Frequently Asked Questions
FLSA stands for the Fair Labor Standards Act, the 1938 federal law that sets the U.S. wage-and-hour floor. FLSA overtime is the pay it requires: at least 1.5 times your regular rate for every hour over 40 in a workweek, if you are covered and non-exempt.
Weekly only — hours over 40 in a workweek. Federal law has no daily overtime. A few states add their own daily rules, most notably California: 1.5x after 8 hours in a day and 2x after 12.
Employees who pass all three tests: paid on a salary basis, at least $684 per week, with duties that fit an exemption category (executive, administrative, professional, computer, or outside sales). Highly compensated employees earning at least $107,432 face a lighter duties test.
The extra 0.5x on top of straight time within the 1.5x overtime rate. On a $20 wage, the $30 overtime rate is $20 straight time plus a $10 premium. That premium is the only part the 2025–2028 OBBBA deduction covers.
Add the nondiscretionary bonus to the week's pay before finding the regular rate. Example from the federal regulations: 46 hours at $12 plus a $46 bonus is $598 total; $598 / 46 = $13 regular rate; the 6 overtime hours earn an extra $6.50 each — $39 on top, $637 total.
Yes. The FLSA is the federal minimum; when a state rule is stricter — like California's daily overtime — the stricter rule wins. Overtime that only state law requires is real pay, but it is not FLSA overtime, which matters for the federal tax deduction.
From tax year 2026, yes — employers must report qualified overtime compensation in box 12 under code TT. For 2025, separate reporting was optional transition relief (often box 14), so you may need pay stubs to identify the premium amount.
For 2025 through 2028, the premium (0.5x) portion of FLSA-required overtime is federally deductible up to $12,500 (single) or $25,000 (married filing jointly), phasing out above $150,000 / $300,000 MAGI. State income tax may still apply.
Most are, administered by OPM rather than the DOL — your SF-50, block 35, shows E (exempt) or N (non-exempt). FLSA-exempt federal employees can still earn overtime under Title 5, but that overtime sits outside the FLSA and does not qualify for the OBBBA deduction.
You can file a complaint with the DOL's Wage and Hour Division and recover the unpaid back wages. Repeated or willful violations also carry a civil money penalty of up to $2,515 per violation (the figure effective January 16, 2025).