FLSA Overtime Rules in Plain English
The basic rule
Under the FLSA, non-exempt employees must be paid 1.5x their regular rate for hours worked over 40 in a workweek. The workweek is a fixed, recurring 168-hour period — it doesn't have to match the calendar week.
Exempt vs. non-exempt
Being salaried does not automatically make someone exempt. To be exempt, an employee must be paid on a salary basis, meet the salary-level threshold (about $58,656/year in 2026), and pass a duties test for executive, administrative, professional, computer, or outside-sales roles.
Calculating the regular rate
Overtime is based on the 'regular rate,' which includes most bonuses and shift differentials — not just base pay. Forgetting to roll non-discretionary bonuses into the regular rate is a common, costly mistake.
State overtime can be stricter
Several states add daily overtime or different thresholds. California requires 1.5x over 8 hours a day and double-time over 12. Always apply whichever rule is more generous to the employee.
Avoiding the big mistakes
The classic violations are misclassifying employees as exempt, off-the-clock work, and miscalculated regular rates. Automated time tracking and payroll that knows the rules prevent most of them.
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Who is entitled to overtime under the FLSA?
Non-exempt employees, who must be paid 1.5x their regular rate over 40 hours a week.
Does salary make someone exempt?
No. Exemption requires salary basis, a salary-level threshold, and a duties test.
Can MyCo calculate overtime automatically?
Yes. MyCo applies federal and state overtime rules, including daily overtime where required.