Understanding overtime laws by state for accurate payroll

Accurately calculating overtime is critical. If a contractor underpays workers, they’re opening themselves up to fines and potentially even legal action. 

Things aren’t too difficult if a company only works in a single jurisdiction since there’s only one set of guidelines to deal with. But things get more complicated when working across state lines. Many states have their own rules governing overtime pay rates and hours worked thresholds, and they’re not always in line with each other.

In this guide, we explain federal government regulations and cover overtime laws by state to help contractors calculate overtime pay while staying legally compliant.

What is overtime as defined by the federal and state governments?

The Fair Labor Standards Act (FLSA), enforced by the Department of Labor, sets federal overtime laws. It requires employers to pay workers 1.5 times their usual rate for each hour worked over 40 in a week.

The FLSA protects most employees, though the Department of Labor lays out several exceptions. Some workers are also specifically exempt from overtime pay. The FLSA defines an exempt employee as someone who earns above a certain salary threshold and works in an administrative, computer, executive, professional, or outside sales role. Employees must meet both a salary threshold and fall into one of these role categories to be considered exempt. Because most construction workers are paid hourly and perform manual labor, they don’t qualify for exemption under any of these categories. 

In addition to following federal rules, contractors need to keep state rules in mind, too. Many states have their own regulations that define higher pay rates, and prevailing wage laws complicate matters even further by requiring overtime pay to match local rates, which could be higher than the state-set minimum. Unions may also have their own rules regarding overtime.

Overtime trends in the construction industry

Tight deadlines, weather delays, and season-dependent work make overtime more prevalent in construction than in many other industries. In fact, nearly 25% of construction employees report working overtime, surpassing finance, admin, and retail employees. Because contractors need to pay so many employees overtime, they need a good understanding of federal and state laws to stay compliant.

What are the overtime laws in each state for the construction industry?

Here’s a breakdown of overtime laws for all 50 states and Washington, D.C.

Note: While state-specific overtime laws often align with the FLSA, there may be additional rules to consider beyond hours-worked thresholds and pay rates, such as exempt and nonexempt employee classifications.

Which states have daily overtime working hour rules?

Besides overtime pay triggering for hours worked over 40 a week, Alaska, California, Colorado, and Nevada also have daily thresholds. The trigger point for each state is above eight hours of work in a day, except in Colorado, where it’s 12 hours. In Nevada, the daily threshold only applies to workers earning less than $18 an hour.

These state-specific rules can make things tricky for contractors doing business across multiple jurisdictions. This gets complex, which is why generic payroll software doesn’t cut it. Stay on top of the latest legislation and avoid these pitfalls by using Miter Payroll. Miter automatically applies federal and state overtime rules based on each worker’s workplace location. Customers can also input their own custom overtime rules, such as layering in additional union requirements.

Which states have double-time overtime laws?

California is the only state that requires employers to pay double-time rates. Contractors must pay twice a worker’s usual rate for all hours worked over 12 in a single day, or over eight on the seventh consecutive day of work in a week.

Since all other states work on a time-and-a-half basis, contractors working in California need to be extra careful to adjust their systems accordingly. Underpaying workers can lead to fines, DOL audits, back-pay obligations, and potential litigation.

Simplify payroll across state lines with Miter.

Working across jurisdictions can turn managing overtime pay from a routine task into a logistical nightmare. But getting it wrong can expose business owners to costly fines and even lawsuits.

It’s easy to make mistakes when juggling different overtime thresholds, hourly rates of pay, and prevailing wage requirements. For many contractors, the biggest wrench in the works is a disconnected time tracking and payroll system that doesn’t keep up with changes in legislation. 

That’s why we built Miter. By linking job-site hours to payroll and automatically calculating overtime pay for every jurisdiction, teams can keep payroll accurate and audits off the table. Miter’s all-in-one platform combines payroll, HR, benefits, and workforce management, helping combat complex compliance requirements and streamlining payment processes.

Frequently asked questions

How many hours is considered overtime?

The minimum hours to trigger overtime pay varies by state, but the vast majority follow the rules laid out in the FLSA. This legislation specifies that companies must pay nonexempt employees 1.5x their usual rate for each hour worked over 40 in a week.

Alaska, California, Colorado, and Nevada also have daily overtime thresholds. In Alaska, California, and Nevada, employers must pay overtime for work over eight hours in a day. In Colorado, the threshold is over 12 hours a day. Note that in Nevada, the daily threshold only applies to workers earning less than $18 an hour.

Is overtime pay mandatory?

Yes, overtime is mandatory at the federal and state levels for nonexempt employees. Noncompliance may lead to financial penalties or even legal action.

Do salaried employees get overtime pay?

It depends on whether they meet the FLSA’s exemption criteria. To be exempt, an employee must earn at least $684 per week and perform executive, administrative, or professional duties, a standard that applies to roles like project managers or office staff, but not to salaried workers doing manual or trade work. A salaried field worker who doesn’t meet the duties test is still entitled to overtime pay, regardless of how they’re paid.