Federal law requires time-and-a-half for hours worked past 40 in a week, unless the job is exempt. The word doing the work there is exempt, and it is widely misunderstood.
What exemption actually requires
Under the Fair Labor Standards Act, the main exemptions apply only when all of the following hold.
- Salary basis. You are paid a fixed salary that does not vary with hours or quality of work.
- Salary level. The salary meets the federal minimum threshold for exemption. The figure changes over time and several states set higher ones, so check the current number rather than a remembered one.
- Duties. The actual work is executive (managing others, with hiring input), administrative (office work involving discretion on significant matters), or professional (advanced knowledge in a learned field). Job descriptions do not decide this. What you spend your days doing does.
Miss any one test and the role is non-exempt, which means overtime applies regardless of being salaried, regardless of the title, and regardless of what the offer letter says. "Manager" titles attached to jobs that mostly consist of the same work as the team are the classic misclassification.
What counts as hours worked
Time you are required to spend is work time: mandatory meetings, required training, opening and closing procedures, answering required messages outside shift. Employers cannot accept the work and decline to count it. "We do not pay overtime" is not a policy an employer can lawfully hold for non-exempt staff; they can prohibit unauthorized overtime and discipline for it, but hours actually worked must be paid.
State layers on top
A handful of states add daily overtime, most prominently California, where non-exempt work past 8 hours in a day earns overtime even in a 40-hour week. State thresholds for exemption also run higher than federal in several states. When state and federal rules differ, the one more favorable to the worker applies.
The calculation people get wrong
Overtime is one and a half times your regular rate, and the regular rate is not always your base hourly wage. It includes most non-discretionary bonuses, shift differentials and commissions, spread across the hours worked. An employee paid $20 an hour who also earns a production bonus has a regular rate above $20, and the overtime premium must be calculated on the higher figure. Employers routinely miscalculate this in good faith.
Two more common errors. Overtime is calculated per workweek, a fixed and recurring 168-hour period, and cannot be averaged across two weeks to avoid it. And private employers generally cannot offer compensatory time off instead of overtime pay; that option exists for public sector employers under specific rules.
Independent contractor misclassification
A separate and larger problem sits alongside exemption: being labeled an independent contractor while working as an employee. Contractors receive no overtime, no minimum wage protection and no unemployment coverage, which makes the label financially significant. The test looks at economic reality, chiefly how much control the company exercises over how, when and where you work, whether you can realize profit or loss, and whether the work is integral to the business. A 1099 form and a signed agreement calling you a contractor do not settle it. What you actually do does.
If you think you are misclassified
Keep your own record of hours. Raise it internally first if that feels workable, since payroll corrections happen. Beyond that, the Department of Labor's Wage and Hour Division takes complaints, investigates without naming the complainant where possible, and can recover back pay, generally reaching two years back, three if the violation was willful. Retaliation for a wage complaint is separately unlawful.
The current salary thresholds and duties tests are published by the Department of Labor's Wage and Hour Division.