Overtime pay rules every HR professional needs to know

Executive overview

Under the FLSA, non-exempt employees must be paid at least 1.5x their regular rate for any hours worked beyond 40 in a 168-hour work week. Not all salaried employees are exempt — exemption depends on both salary threshold and job duties. The DOL updated overtime thresholds in 2024, making more workers eligible.

Failing to pay required overtime is illegal and can trigger fines up to $10,000 or criminal prosecution.

Who qualifies for overtime

• Non-exempt (hourly) employees must receive overtime for hours over 40 per work week
• Exempt roles include executive, administrative, professional, computer, and outside sales positions
• Salaried employees are not automatically exempt — they must meet both salary and duties tests
• Employees earning below the annual salary threshold are automatically non-exempt

Overtime salary thresholds (2024 DOL update)

• Effective July 1, 2024: threshold set at $43,888/year
• Effective January 1, 2025: threshold rises to $58,656/year
• DOL will update thresholds every three years going forward
• No federal maximum on overtime hours unless the worker is under 16

State-specific rules

• Colorado, Oregon, and California require daily overtime calculations, not just weekly
• Employees are entitled to whichever standard — state or federal — provides the higher rate
• HR teams operating across multiple states must track each state's rules individually

FLSA compliance requirements

• Employers must post overtime and minimum wage standards in visible workplace areas
• Overtime pay cannot be waived for non-exempt employees under any employer-employee agreement
• An employer announcement that overtime won't be paid does not exempt them from paying it
• Overtime cannot be averaged across two or more work weeks
• Overtime must be paid on the regular payday for the period in which it was earned

Penalties for noncompliance

• $1,000 fine per violation for failure to pay overtime
• Willful violations: up to $10,000 fine and potential criminal prosecution
• Second conviction can result in imprisonment
• Non-willful violations: 2-year statute of limitations; willful: 3 years