MAY 11, 2022



Most everyone has heard the word “overtime,” but when it comes to payroll there are specific regulations that apply. Many states require overtime pay for working more than 8 hours in a day. As a business owner, it’s important to know about state overtime laws and how they vary. It also affects the payroll taxes that are calculated each time you run payroll.

First, it’s important to understand how to define how employees are paid.


Salaried Employee. This worker typically receives the same set amount of pay on a regular basis regardless of how many hours he or she works (see below for exceptions).


Hourly Employee. This worker receives an hourly wage for the job performed. Generally, these workers are classified as nonexempt and therefore subject to the overtime provisions under the FLSA. 



Before we get into state overtime laws, we must first examine which types of employees these laws apply to. 


Exempt Employee. A worker is exempt from the overtime provisions of the Fair Labor Standards Act (FLSA) when he or she is classified as an executive, professional, administrative, or outside sales employee, and meets the specific criteria for the exemption. With some exceptions, exempt employees are usually paid on a salaried basis. Certain professionals such as teachers, lawyers and doctors may also be paid on an hourly basis while still retaining their exemption status. 

Nonexempt Employee. A worker who is not exempt from the overtime provisions of the FLSA is entitled to overtime pay for all hours worked beyond 40 hours in a workweek (as well as any other state overtime provisions). These employees may be salary or hourly.  Salaried nonexempt employees must still receive overtime in accordance with federal and state laws.



Under federal law, employers must pay nonexempt workers time and a half for all hours worked beyond 40 hours in a workweek. This may seem like a straightforward policy, but differences in state laws make overtime compliance more complicated, and business owners must pay careful attention to the regulations where their business and employees are located. The overtime rate of pay as specified by the FLSA is time and a half.

While some states have less stringent laws others have even stricter state overtime laws than the federal FLSA. Since the FLSA gives many states the opportunity to choose their own rules, employers should bear in mind the specific requirements of their state and make sure they are compliant. 


For example, Alaska, California, and Nevada require overtime payment for any hours worked over 8 in a day. In Colorado, overtime applies to any hours worked over twelve in a day. In Kentucky, workers who work seven consecutive days in the same workweek must be paid overtime on their seventh day. In California, workers are eligible for double overtime (increase from 1.5 to 2 times regular hourly pay) after working 12 hours on a single day. 

Many states have specific guidelines that apply to various industries and workers. HR teams and those in charge of enforcing rules and maintaining compliance must evaluate each requirement as it applies to their workers. In accordance with those guidelines, businesses need to adjust scheduling or staffing to best manage costs.



Payroll Vault is boutique brand that specializes in customizable HR solutions for small businesses, including compliance with state and federal overtime laws. We cater our approach to perfectly fit your business and its needs to keep you focused on growing your company with happy employees.


To learn more about how Payroll Vault - Hampton Roads can work for you, get a quote today.