**FLSA overtime formula**: **Overtime Pay = Regular Rate × 1.5 × Overtime Hours**. **Regular rate** = Total compensation ÷ Total hours worked (not always the same as hourly wage). **Step-by-step calculation (2025 FLSA standards)**: **Step 1: Determine regular hourly rate**. **Hourly employees**: Regular rate = stated hourly wage. **Example**: $20/hour employee → Regular rate = $20. **Salaried non-exempt employees**: Regular rate = Weekly salary ÷ 40 hours. **Example**: $800/week salary ÷ 40 hours = $20/hour regular rate. **Step 2: Identify overtime hours** (hours worked beyond 40 in a workweek). **FLSA workweek**: 7 consecutive 24-hour periods (168 hours total).

Employer defines start/end (e.g., Sunday 12:00am - Saturday 11:59pm). **Example**: Employee works 50 hours in workweek → **10 overtime hours**. **Step 3: Calculate overtime rate** (1.5× regular rate). **Example**: $20/hour × 1.5 = **$30/hour overtime rate**. **Step 4: Calculate total pay**. **Regular pay**: 40 hours × $20 = $800. **Overtime pay**: 10 hours × $30 = $300. **Total gross**: $800 + $300 = **$1,100**. **Common overtime scenarios**: **1.

Standard hourly employee**: Regular rate: $18/hour.

Hours worked: 48 (40 regular + 8 OT).

Regular pay: 40 × $18 = $720.

OT pay: 8 × ($18 × 1.5) = 8 × $27 = $216. **Total: $936**. **2.

Multiple pay rates in same week** (blended rate required). **Example**: Employee works 30 hours at $15/hour (Job A) + 20 hours at $18/hour (Job B) = 50 total hours. **Calculate weighted average regular rate**: Total compensation: (30 × $15) + (20 × $18) = $450 + $360 = $810.

Total hours: 50. **Regular rate**: $810 ÷ 50 = **$16.20/hour**. **OT calculation**: Regular pay (first 40 hours): 40 × $16.20 = $648.

OT pay (10 hours over 40): 10 × ($16.20 × 1.5) = 10 × $24.30 = $243. **Total: $891**. **3.

Piece rate worker** (paid per unit produced). **Example**: Employee produces 500 widgets at $2/widget, works 48 hours.

Total compensation: 500 × $2 = $1,000. **Regular rate**: $1,000 ÷ 48 hours = $20.83/hour. **OT owed**: **Half-time premium** on 8 OT hours (already paid $20.83/hour via piece rate, owe additional 0.5× for OT hours).

OT premium: 8 hours × ($20.83 × 0.5) = 8 × $10.42 = $83.33. **Total pay**: $1,000 (piece rate) + $83.33 (OT premium) = **$1,083.33**. **4.

Commission-based employee** (non-exempt). **Example**: Salesperson earns $600 base + $1,400 commission in week with 50 hours worked.

Total compensation: $2,000. **Regular rate**: $2,000 ÷ 50 hours = $40/hour. **Recalculate pay with OT premium**: Regular pay (first 40 hours): 40 × $40 = $1,600.

OT pay (10 hours): 10 × ($40 × 1.5) = 10 × $60 = $600. **Owed total**: $1,600 + $600 = $2,200. **Already paid**: $2,000. **Additional OT owed**: $2,200 - $2,000 = **$200**. **5.

Fluctuating workweek method** (salaried non-exempt with variable hours). **Requirements**: Fixed weekly salary regardless of hours worked.

Agreement that salary covers all hours (straight time).

Hours fluctuate week to week. **Calculation**: **Half-time OT premium** only (salary already covers straight time). **Example**: $1,000/week salary, 50 hours worked.

Regular rate: $1,000 ÷ 50 = $20/hour.

OT premium: 10 OT hours × ($20 × 0.5) = $100. **Total: $1,100** ($1,000 salary + $100 OT premium). **State-specific OT rules** (stricter than FLSA in some states): **California**: OT after 8 hours/day (not just 40/week). **Double-time** after 12 hours/day or 8 hours on 7th consecutive workday. **Alaska**: OT after 8 hours/day or 40 hours/week. **Colorado**: OT after 12 hours/day or 40 hours/week. **Nevada**: OT after 8 hours/day if hourly rate <1.5× minimum wage ($18/hour threshold in 2025). **Exempt vs non-exempt employees**: **Exempt** (no OT required): Executive, administrative, professional, computer, outside sales employees. **Salary basis test**: Paid fixed salary ≥$684/week ($35,568/year) in 2025. **Duties test**: Primary duties involve management, professional work, or outside sales. **Non-exempt** (OT required): Hourly employees, salaried employees earning <$684/week, or not meeting duties test. **Overtime calculation mistakes to avoid**: **1.

Using 40-hour divisor for all employees**: Salaried employees working 50 hours → Divide weekly salary by actual hours worked (50), not 40. **2.

Forgetting bonuses in regular rate**: Non-discretionary bonuses (production, attendance) must be included in OT rate. **Example**: $20/hour + $200 attendance bonus in 50-hour week.

Regular rate: (40 × $20) + (10 × $30) + $200 = $1,300 total ÷ 50 hours = $26/hour (not $20).

Recalculate OT at $26 × 1.5 = $39/hour. **3.

Paying comp time instead of cash OT**: **Private sector**: Comp time (paid time off instead of OT pay) is **illegal** under FLSA. **Public sector**: Allowed with restrictions (max 240 hours accrued). **4.

Averaging hours across multiple weeks**: **Wrong**: 60 hours Week 1 + 20 hours Week 2 ÷ 2 = 40 hours average (no OT). **Right**: Week 1 OT: 20 hours × 1.5× rate.

Week 2: No OT. **5.

Excluding non-discretionary bonuses**: Quarterly production bonus, shift differential, retention bonus → Must include in regular rate for OT calculation weeks. **FLSA recordkeeping requirements** (employers must maintain): Time worked each day.

Total hours worked each workweek.

Basis of pay (hourly rate, salary, piece rate, commission).

Regular rate for each workweek.

Total daily/weekly straight-time earnings.

Total OT earnings for each workweek.

All deductions from and additions to wages.

Total wages paid each pay period.

Date of payment and pay period covered. **Penalties for OT violations**: **Back pay**: Owed OT for up to 2 years (3 years if willful violation). **Liquidated damages**: Equal to amount of back pay (doubles the award). **Example**: $10,000 unpaid OT → Employee recovers $20,000 ($10k back pay + $10k liquidated damages). **DOL fines**: Up to $2,074 per violation (repeated/willful violations). **Example calculation (real-world)**: **Retail manager (non-exempt)**: Base salary: $50,000/year ÷ 52 weeks = $961.54/week.

Hours worked: 55/week average. **Is OT required?** Yes (below $684/week threshold requires OT if duties don't meet exemption). **OT calculation**: Regular rate: $961.54 ÷ 55 hours = $17.48/hour.

Regular pay (40 hours): 40 × $17.48 = $699.20.

OT pay (15 hours): 15 × ($17.48 × 1.5) = 15 × $26.22 = $393.30. **Weekly total owed**: $699.20 + $393.30 = **$1,092.50**. **Currently paid**: $961.54. **Weekly OT shortfall**: $130.96. **Annual underpayment**: $130.96 × 52 = **$6,810**. **Potential exposure** (2 years + liquidated damages): $6,810 × 2 = $13,620 back pay + $13,620 liquidated damages = **$27,240 liability**.

**Not all employees get overtime**.

FLSA provides **exemptions** for certain white-collar employees meeting **salary and duties tests**. **Main overtime exemptions (2025)**: **1.

Executive exemption** (managers). **Salary test**: ≥$684/week ($35,568/year) paid on salary basis. **Duties test**: Primary duty = management of enterprise or department.

Regularly directs work of 2+ employees.

Authority to hire/fire or recommendations on personnel changes given particular weight. **Example**: Store manager managing 10 employees, hiring/firing authority, earning $750/week = **Exempt** (no OT required). **Borderline case**: Assistant manager earning $600/week (below $684 threshold) = **Non-exempt** (must pay OT regardless of duties). **2.

Administrative exemption** (office workers). **Salary test**: ≥$684/week on salary basis. **Duties test**: Primary duty = office/non-manual work directly related to management or general business operations.

Exercise discretion and independent judgment on matters of significance. **Examples - Exempt**: Human resources manager (policies, hiring strategy).

Financial analyst (budget recommendations).

Marketing director (campaign strategy).

Executive assistant to CEO (significant discretion on operations). **Examples - Non-exempt**: Payroll clerk (following established procedures, no discretion).

Bookkeeper (routine data entry).

HR assistant (scheduling interviews, no policy authority). **3.

Professional exemption** (learned and creative). **Learned professionals**: Advanced knowledge in science/learning field (law, medicine, engineering, accounting, teaching).

Knowledge acquired by prolonged specialized intellectual instruction. **Salary**: ≥$684/week (or paid on fee basis for doctors, lawyers). **Examples - Exempt**: Registered nurse (RN).

Certified public accountant (CPA).

Licensed attorney.

Pharmacist. **Examples - Non-exempt**: Licensed practical nurse (LPN) - trained, but not advanced degree required.

Paralegal (works under attorney supervision). **Creative professionals**: Invention, imagination, originality, or talent in recognized artistic field. **Examples - Exempt**: Graphic designer (original creative work).

Musician (composer/arranger).

Journalist (original writing).

Actor. **Examples - Non-exempt**: Photographer following standard event coverage (no creative control).

Copy editor (editing others' work, not creating). **4.

Computer employee exemption**. **Salary test**: ≥$684/week OR ≥$27.63/hour (unique hourly option for computer professionals). **Duties test**: Systems analyst, programmer, software engineer, similar role.

Primary duty = design/development/analysis of computer systems/programs OR design/documentation/testing/creation/modification of computer programs related to machine operating systems. **Examples - Exempt**: Software engineer ($90k salary) designing applications.

Database administrator ($30/hour) managing enterprise systems. **Examples - Non-exempt**: Help desk technician ($25/hour) troubleshooting user issues.

Computer repair technician (hardware focus). **5.

Outside sales exemption** (no salary test). **Duties test**: Primary duty = making sales or obtaining orders/contracts.

Customarily and regularly engaged away from employer's place of business. **No minimum salary required**. **Examples - Exempt**: Pharmaceutical sales rep visiting doctors' offices.

Real estate agent showing properties.

B2B sales rep traveling to client sites. **Examples - Non-exempt**: Retail sales associate (selling in store, not "outside").

Inside sales (telemarketing, selling from office). **6.

Highly compensated employee (HCE) exemption** (simplified test). **Salary test**: ≥$107,432/year total annual compensation (includes commissions, bonuses).

At least $684/week paid on salary basis. **Duties test**: Perform office/non-manual work **AND** customarily/regularly perform at least 1 duty of exempt executive, administrative, or professional employee. **Easier to meet** than full exemption tests. **Example**: Senior sales manager earning $120,000/year (base + commission), occasionally manages team projects = **Exempt** under HCE (even if doesn't meet full executive exemption duties). **Common non-exempt job types** (ALWAYS eligible for OT): **Hourly workers**: Retail sales, restaurant servers, cashiers, warehouse, manufacturing. **Service workers**: Janitors, security guards, drivers, technicians. **Non-management office**: Data entry, receptionists, customer service reps. **Healthcare non-professional**: Medical assistants, nursing aides (LPN/CNA), home health aides. **First responders**: Police officers, firefighters, EMTs/paramedics (some have special OT rules at 7k/28-day threshold). **Misclassification consequences**: **Employer intentionally classifies non-exempt employee as exempt to avoid paying OT**: **Violation**: FLSA willful violation. **Penalties**: 3 years back pay + liquidated damages (double damages).

Criminal prosecution (up to $10,000 fine + 6 months jail for repeat offenders). **Example**: Retail assistant manager earning $40,000 salary ($769/week), working 55 hours/week.

Employer claims "manager" exemption → **Misclassified** (does not meet duties test - spends 90% time doing non-management tasks). **Liability**: 3 years × 52 weeks × 15 OT hours/week × ($14.80 × 1.5) = **$34,398** back wages + $34,398 liquidated damages = **$68,796 total**. **State-specific higher salary thresholds** (stricter than federal $684/week): **California (2025)**: Minimum $66,560/year ($1,280/week) for most exemptions.

Computer professionals: $112,065.20/year or $53.80/hour. **New York (2025)**: NYC employers (11+ employees): $1,200/week ($62,400/year).

NY suburbs (Westchester, Nassau, Suffolk): $1,050/week ($54,600/year).

Remainder of NY: $1,064.25/week ($55,341/year). **Washington (2025)**: 2.5× state minimum wage = $1,302.40/week ($67,725/year) for employers with 50 employees. **Alaska (2025)**: 2× state minimum wage = $11.73/hour × 2 = $23.46/hour minimum salary equivalent. **Safe harbor test for employers**: Before classifying employee as exempt: **1.

Salary test**: Confirm ≥$684/week ($35,568/year) guaranteed salary. **2.

Duties test**: Document that employee's PRIMARY duty (>50% of time) meets exemption criteria. **3.

Job description vs reality**: Actual duties performed (not just job title/description) control exemption status. **Example - Misclassification risk**: "Office Manager" earning $800/week but spends 80% time doing receptionist work (answering phones, filing, scheduling) + 20% management → **Not exempt** (primary duty is clerical, not management). **How employees can challenge exempt classification**: **1.

File complaint with Department of Labor Wage and Hour Division** (free, anonymous). **2.

Hire employment attorney** for private lawsuit (can recover attorney fees if successful). **3.

Class action lawsuit** (if multiple misclassified employees at same company). **Documentation for OT disputes**: Employees should keep personal records: Daily start/end times.

Break periods.

Tasks performed each day.

Email/texts showing after-hours work.

Comparison to job description vs actual duties.